ZAR likely to be driven by hopes and fears for the time being on domestic, global uncertainties: Commerzbank

The South African rand is expected to be driven by hopes and fears for the time being, against a backdrop of domestic as well as global uncertainties, according to the latest research report from Commerzbank.

Yesterday's data on growth in the fourth quarter of 2018 were better than expected only at first glance. Although the momentum slowed less than expected compared to the previous quarter, with a seasonally adjusted increase of 1.4 percent (annualised).

What is particularly worrying, however, is that demand is mainly driven by consumption and gross fixed capital formation declined for the fourth quarter in a row. This was mainly due to a decline in machinery and equipment investments, the report added.

These are not good foundations for sustainable growth. However, investors remain cautious in view of the upcoming rating review at the end of March and the upcoming elections on May 8.

"Urgent decisions such as the restructuring and reorganization of the ailing state-owned enterprises or the planned land reform seem like a dance on a knife's edge in view of the different interests of investors and voters," Commerzbank further commented.