Between this quarter and the third quarter of 2019, the exchange rate of the rand is expected to average R14.50 to the US dollar – this is according to Bloomberg median forecasts.4 However, the difference between the most optimistic and the most pessimistic survey participants on the exchange rate forecast for the first quarter of 2019 is almost R3.00 – I have little doubt that one of the participants somewhere within that range will be correct!
Such a wide dispersion around the median forecast over such a short forecast horizon is representative of the uncertainty that has become an inherent part of our lives. And this uncertainty adds significant complexity to the conduct of monetary policy, the most recent outcome of our monetary policy meeting and the finely balanced decision being a good case in point.