THURSDAY, 11.00AM
INVESTEC Securities said on Wednesday that the rand had been among the weakest currencies in the Southern African Development Community over the past 18 months.
Between January last year and the end of last week, the rand lost 20% against he Malawi kwacha, 11% against the Mauritian rupiah, 17% against the Mozambican metical and 73% against the Angolan kwanza.
Investec noted that the relative strengths of regional currencies runs counter to the conventional wisdom among many SA fund managers that Africa is a poor place to invest due to inherent currency risk, and African investments are unlikely to beat local ones once currency devaluation is taken into account. The bank said few local funds had taken up African investment opportunities since institutional exchange control relaxations came into effect early last year.
However, Absa chief economist Charles Jonker was not as positive about SADC currencies, saying the rand is still less risky than other SADC currencies because of their lack of hedging mechanisms. He added that asset managers are staying away from SADC countries because they do not yet conform to international standards for emerging markets.
He ascribed much of the rand’s movement against regional currencies to its excetional weakness last year. But since then it has been traded actively, while regional currencies remained illiquid.