Country Report Swaziland January 2008

Outlook for 2008-09: Exchange rates

During the forecast period the lilangeni will remain pegged at par to the rand. Economic fundamentals point to a steady depreciation over the forecast period. We forecast that the rand (and hence the lilangeni) will average R7.25:US$1 in 2007, R7.7:US$1 in 2008 and R8:US$1 in 2009. A sharper fall is possible, however: risk factors are the price of crude oil, sharp upward movements in US interest rates, South Africa's widening current-account deficit and the impact of short-term speculative inflows on the capital account.

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