The Rand fell to spectacular levels against major partners throughout last week. This was due to the risk aversion evident throughout the emerging markets which weighed heavily on the high yielding Rand. Adding to this were comments from the IMF that the Rand may be overvalued.

Last weekend’s Alliance Summit with the ANC was aimed at consolidating economic perspectives. The alliance discussed the possibility of switching the focus to twin targets of economic growth and inflation, an abandonment of their current inflation based target.  This suggests they will tolerate higher rates of inflation going forward, provided growth was benefiting. Also addressed was an increase in government borrowing in order to fund further welfare spending and the highly charged topic of land redistribution.

We look for a strengthening Rand this week, as it may have headed into oversold territory last week amid the panic. Data out that will provide some volatility this week will be concentrated in the US, with the rate decision on Wednesday as well as CPI and GDP figures on Thursday

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