Which Currencies Are Most Vulnerable?

One of our clients, a pan-African investment bank, recently asked us which African currencies are most vulnerable at the moment. We judged the vulnerability using three-month forecasts against the US dollar. Here is the response we gave:

South African rand: The rand looks weak from a technical perspective. It is suffering amid bearish global investor sentiment towards emerging markets in general, and in particular those which have wide current account deficits that are funded by foreign portfolio flows - South Africa is a case in point. Over the coming months, we expect the 'hot money' flows into the bond market to wane as US treasury yields rise, sending the rand towards the psychologically important ZAR11.0000/US$ level and ZAR11.2500/US$ thereafter.

Botswana pula: The pula will continue on the depreciatory trend it has been in since the start of 2012, in line with the aims of the Bank of Botswana. A recent rate cut in December 2013 will aid in this.

Rand In Weakest Position
Africa - Forecast % Appreciation/Depreciation Against US$ Over Three Months

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