As the rand breaks through the R16/ mark and analysts forecast a possible move towards R15.50, optimism is building that a firmer currency could ease pressure on households and give the Treasury more room for manoeuvre ahead of the national budget speech.
Economists say a stronger rand has the potential to lower inflation, reduce the cost of imports such as fuel and food, and improve the countrys debt position. But they also caution that exporters and job creation in key sectors could face headwinds if the currency strengthens too far or too fast.
According to UJ economist Peter Baur, a more stable and valuable rand reduces inflationary pressure across the economy, bringing a range of downstream benefits for consumers.
