In a report entitled “11 before 12”, Barclays foreign exchange strategists Mike Keenan and Ndzutha Mngqibisa expect the rand to strengthen against the US dollar in the near term.
They expect the currency to reach R11/$ in the first half of this year after it had touched R11.81/$ in December.
This view on the rand is reflected in the near-record activity in the forward exchange market, as exporters lock in favourable exchange rates because forward rates are more favourable for exporters than forecast rates.
Activity in the forward market spiked 40% in December to a daily average of $1.802-billion from $1.285-billion in November. The December turnover was the highest since a record $2.052-billion in May 2011.
But the Barclays analysts warned that risks remained.
– Helmo Preuss