The Chief Investment Officer of Equity and Asset Allocation at Capricorn Asset Management (CAM), Floris Bergh told Xinhua on Thursday that he foresees the Namibian Dollar to weaken against the U.S. Dollar after South African president Jacob Zuma reshuffled his cabinet recently.

Namibian Dollar“The South African Rand (which is linked to Namibian Dollar) depreciated will by 10.2 percent from 12.32 per USD to 13.58.” said Bergh.

He added that he expects more downgrades from other rating agencies: “Other rating agencies will follow suit in due course and cut their ratings. However, S&P was the heavy weight. How things will play out from here is very difficult to say.” he said.

The credit downgrade of RSA debt was the culmination of events that played out over the last week of March and into early April. Financial markets started to price in a “bad news” scenario when Gordhan and his deputy were recalled from an overseas trip. They were presenting to overseas investors regarding the RSA economy and policies. In the end Zuma reshuffled his cabinet, which, amongst others, meant the axing of Gordhan and his deputy and the appointment of a new minister of finance, and a new deputy minister.

This prompted Standard and Poor’s (Credit rating agency) to cut their investment grade rating of SA foreign debt to non-investment grade and that of domestic debt to BBB-, one notch above non-investment grade. The key reason they provided was that the reshuffle constituted a significant policy change amidst increased political uncertainty.

Since Namibia’s economy is closely tied to South Africa, any political unrest in neighboring South Africa is felt in Namibia and reverberates across various Namibian indicators like inflation of housing, food and fuel prices as well as low commodity prices for exporting, according Bergh.

Capricorn Asset Management is a subsidiary of Bank Windhoek and is one of Namibia’s leading asset management companies. Enditem

Source: Xinhua/NewsGhana.com.gh