Market signals point to rand’s revival after weeks of losses

Bloomberg

South Africa’s rand is on track for a sixth consecutive week of declines versus the dollar — but there are indications the selloff may be about to ease.
One of this year’s worst emerging-market performers, the rand has carried a heavy risk premium amid concerns about the nation’s growth as state-owned power company Eskom Holdings SOC Ltd deploys unprecedented rolling blackouts. Anticipation about a government bail-out of the company have also been baked into the rand, which has floundered as peers such as Chile’s peso have surged.
The tide may be turning.
Investors largely welcomed
Finance Minister Enoch Godongwana’s plan for embattled Eskom, which spurred a brief rally in the rand and the biggest foreign bond inflows in nearly two weeks.
Traders have also begun to bet that a weaker US dollar will cool some price pressures that have been evident globally — which would support the rand’s prospects.
Bank of America strategists including Mikhail Liluashvili and David Hauner said they had turned bullish on the rand in a global research report published Feb. 24, forecasting the currency to rise 2% from current levels by the end of March.
The rand is the most undervalued emerging-market currency apart from Russia’s ruble. Currency investors are paying the lowest premium in nearly 17 years to hedge against further losses in the rand.