FOREIGN affairs leading to a weakened South African Rand could be the reason our fuel prices increase at the end of the month.
Two months of a modestly improving Rand could be undone after the currency was caught up in the emerging market chaos triggered by Turkey’s economic difficulties.
This is according to the Automobile Association (AA).
‘Until the crisis hit, the fuel price picture for August had been flat, with data predicting modest declines in all fuel types at month-end, thanks to reasonable stability in the Rand and international oil prices,’ said the AA.
Mid-month data suggests a fall of about 2c in petrol, with 4c and 8c drops predicted for diesel and paraffin respectively.
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However, the daily exchange rate for the Rand fell nearly 9% against the US Dollar in two days after the news of Turkey’s troubles broke, and remains well above its recent trend.
This has tipped petrol towards a likely increase at month-end, and substantially offset the gains made by diesel and paraffin.
The AA said the fuel price trajectory towards the end of August would depend on factors largely beyond South Africa’s control.
‘Turkey is resisting tighter fiscal policy and an end to the stand-off with the United States over the detention of an American citizen.
‘The tendency of investors to regard emerging markets as a single basket means that further negative news out of Istanbul is likely to be bad for the Rand and South Africa’s fuel users, too.’
The association said motorists should not count on the moderate trend of the past six weeks continuing, and advised them to economise where possible.
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