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Further potential for Rand recovery, April 2014

Kanaan Asset Managers

Further potential for Rand recovery

April 2014

According to the Efficient graph, there remains some capacity for the difference between South African bonds and US Bond yields to normalise, which might be associated with the further Rand recovery.

This is good news over the short term for South African equities and bad news for South Africans exposed to offshore funds, in terms of its Rand value.

At this stage we believe that for the medium to the long term that the Rand will eventually be under pressure again, because of the tapering off of quantitative easing and the stronger prospects for equities in first world countries and taking into account Rand depression over the past 30 years, as shown in the 2nd graph.

­­Andre Delport

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