markets

From EM Leader to Laggard, Rand Erases May Gains in Just Two Days

It has been a volatile May for the rand.

After leading emerging-market gains against the dollar last week, it took just two days for South Africa’s currency to erase its advance as rising U.S. yields and geopolitical tensions dampen investors’ appetite for risk.

The rand was the worst performer in emerging markets for the better part of Tuesday, losing as much as 1.6 percent, before being overtaken the by the lira, which sank more than 2 percent. The rand weakened 1.1 percent as of 2:20 p.m. in Johannesburg to 12.4627 per dollar.

The wild ride may not be over, according to Shireen Darmalingam, a macro-economic strategist at Standard Bank Group Ltd. in Johannesburg. In the short term, the currency will be “sensitive to global events,” though the medium-term outlook remains “relatively constructive,” she said in a client note.

Standard Bank forecasts the rand at 12.50 per dollar by year-end and 12.70 by the end of 2019.

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