The good news for exporters and bad news for importers is that the rand has lost almost 6% against the dollar over the past month.
Renewed foreign interest may allow it to claw back some lost ground but longer-term indicators suggest that the days of the R6/$ range are numbered.
The euro has gained 12% against the rand since the start of the year.
Exporters should benefit from a lower rand, but Escom’s warning of load-shedding shutting down mining and factory production would negate the benefit. Jogging sideways against the euro, European buyers of our produce have seen no price reduction since February. Meanwhile, costs incurred by agriculture producers’ fuel- guzzling machinery have risen.
In the past ten years, the rand has suffered two major value losses, in 2001 and 2008. While history does not necessarily repeat itself, there’s a close resemblance between the two falls and their recovery periods. I have overlaid the dollar/rand and the euro/rand exchange rates with Fibonacci Arcs that suggest that the rand’s high value has been by-passed.
A broken triple top in the rand/dollar exchange rate point-and-figure chart earlier this month gives us a count to about $1/R8,59, which, if fulfilled, would take it back to the level last seen in April 2009. Should this count be accurate and should the oil price, which is now 90% higher than then, not recede, we’ll become a nation of cyclists.
However, as it would take time to fulfil, and short-term charts suggest a rand gain, it is too early to switch vehicles yet.
Frantically bouncing, the euro has at times lost 5,6% against the dollar in the past six weeks. Unfortunately having switched it allegiance from the dollar to the euro, the rand has joined its suffering. However, having tested it five times, the rand has formed a solid resistance at about €/R9,8. The euro/rand shorter-term forward chart suggests that the rand will soon begin gaining against the euro.
With the Greeks digging their heels in on further belt-tightening and privatisation, the new MD of the International Monetary Fund (IMF) is in for a torrid time. Taking the actions of the euro zone’s spendthrift partners as a qualification, why should he or she be European? Even the banks of the tighter-fisted members were caught out in the financial meltdown while many emerging market banks, including SA’s were immune to reckless investment. In any case, surely it is politically incorrect to suggest that a western European pedigree makes a person more capable of the IMF job than an Asian, Latin American or African?
Moving in a sideways channel since mid-November, the overall index is forming a support at about 31500 with a near five-month resistance at just above 33000. As yet there is no indication that this channel will be broken in the near term.
Within the six-month channel, apart from special situations, the telecommunication sector had experienced reasonable gain. While slightly overbought in a solid bull trend, the forward chart of Vodacom suggests a sideways drift in the short term, but with a longer-term count to R93,79. Also in a bull trend, unaffected by the recent dip, MTN’s way ahead looks sideways and long term, has a count to R169,78.
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