Notwithstanding the efforts of a number of major economic powers, notably the US and Japan, to weaken their currencies, South Africa was winning the “currency war by default”, a leading South African economist has observed.

Addressing the outlook for the South African economy in 2013, Econometrix chief economist Dr Azar Jammine remarked that recent labour and social ructions, together with robust political statements, had been more effective in weakening the rand than interventions by the South African Reserve Bank and policy initiatives taken under the New Growth Path.

“South Africa is unique, at the moment, in winning the currency war,” he quipped, noting that every central bank governor in the rest of the world was deeply concerned about the effect that a further round of US quantitative easing and Japan’s latest monetary policy interventions could have on the currency market.

“The most successful person to have implemented the [New Growth Path] policy to get the rand more competitive was [Mineral Resources Minister] Susan Shabangu . . . [together with] the miners in Marikana, the farmworkers in De Doorns and now the inhab-itants of Sasolburg.”

The unit had weakened materially over the past six months and was one of the worst- performing currencies of 2013, having fallen nearly 5% since the start of January and breaching the R9 to the dollar level earlier in the week.

In her note on the rand, Investec’s Annabel Bishop pointed out that the currency had weakened from R8.10 to the dollar at the start of the mining strikes in August to R9.04 by January 23.

Foreign investor perceptions had been worsened by the downgrades announced by the three main ratings agencies, leading to a rebalancing of portfolios.

Bishop cautioned that further downgrades were possible should Finance Minister Pravin Gordhan offer any indication of further delays to fiscal-consolidation efforts in his February 27 Budget address to lawmakers.

However, Jammine did not expect the rand to decline at the pace, or to levels, witnessed in 2001 and 2008, despite the deterioration in South Africa’s terms of trade, which resulted in South Africa’s trade deficit rising to historic highs, contributing to an expansion of the current account deficit to 6.3% in 2012.

However, there were also a number of other prevailing forces militating against a serious fall in the rand, including the fact that South African interest rates were higher than those in many other parts of the world.

Another underlying supportive feature was a view that emerging market economies, were expected to outperform advanced economies in the coming decade, which should result in developing economy currencies attracting more interest and, ultimately, rising in purchasing-power-parity terms.

“If the rand were to bomb out now to, say, R9.50 over the next few days or weeks, a lot of investors will suddenly wake up and say: ‘Wow, what an opportunity to get high yield and potential capital appreciation in the future’,” Jammine told and audience attending a Gordon Institute of Business Science seminar.

He expected the rand to end the year at a level of better than R9 to the dollar, but was also of the view that the currency remained on a weakening trend over the medium term.

Bishop’s base case, meanwhile, was for the rand to end the year at around R8.70 to the dollar, but she also presented an “extreme down case” scenario, showing a rand that weakened to around R11.50 by year-end.