However, in 12 months the rand is expected to have weakened over 3 percent to 13.85 per dollar although that median forecast is 58 cents stronger than last month's. "There are still notable local risks aligned to subdued growth and fiscal challenges that warrant caution," said Christopher Shiells, emerging markets analyst at Informa Global Markets.
In October's budget review, South Africa's finance minister Tito Mboweni predicted wider budget deficits and cut growth forecasts that focused spending on infrastructure, manufacturing and agriculture to boost the weak economy. "These challenges may lead to a sovereign credit rating downgrade from Moody's in March if the 2019 budget does not allay any lingering concerns," Shiells said.
The budget is due to be announced in about two weeks, followed by a Moody's review. Moody's is the only major agency still holding South Africa's debt at investment grade. A downgrade of the debt dominated in rands from Moody's will trigger forced capital outflows from passive investments.
Shiells also added to the risks national elections due in May which carry "popular policy moves and reform paralysis". Analysts were still bullish about the support the currency has received from abroad even when local fundamentals have been disappointing. The most bullish forecaster in the sample said the rand would trade at 12.63 per dollar in a year while the most bearish suggested the currency could weaken to 15.50.