South Africa’s rand will outperform emerging-market currencies – SocGen

South Africa’s rand will outperform emerging-market currencies in the coming year, supported by higher interest rates and China’s infrastructure stimulus, according to Societe Generale SA strategists.

They’re predicting a 3.5% gain by year-end, compared with an average of 2.5% losses on average for other emerging-market currencies.

Among 19 other peers, the rand is the only one that SocGen lists its outlook as “slightly bullish,” according to a note on Monday by strategists, including Phoenix Kalen and Marek Drimal.

“We believe that most EM currencies will perform poorly in spot terms over the next year,” they wrote.

They see the rand strengthening to 16.50 per dollar in the last quarter of 2022, and to 15.80 by the third quarter of next year. It was trading around 17.06 per dollar on Monday.

The rand has been hit this year by the resurgent dollar and South Africa’s economic woes. It lost more than 5% against the dollar over the past month, making it the second-worst performing emerging-market currency.