Advantage Asset Managers’ chief investment strategist Wayne McCurrie said in Pretoria on Tuesday afternoon that fair value for the rand was R7 to R8 to the dollar over two to three years, but that 50% of this had suddenly happened in the last month and a half.
“I had been banging on for some time that the rand was overvalued and was going weaker to a fair value of seven to eight to the dollar in the next two to three years. In April, however, I almost gave up in the face of the continued rand strength — but then it went ahead and weakened dramatically in a month and a half,” he said.
“More than 50% of this move has been done already,” he added.
McCurrie said that commodities were at the top of a cyclical turning point and this would place more pressure on the rand, combined with a slightly higher inflation picture.
McCurrie provided strong evidence to suggest commodities had spiked just before a turning point in their cycle.
“If you notice the recent spike on the commodities it is a down signal, which traditionally indicates the end of the cycle,” he said. – I-Net Bridge