The first major impact on motorists due to the sudden weakening of the Rand (following recent ratings downgrades of South Africa by a pair of international agencies) will be a considerable hike in the price of fuel in May, the Automobile Association (AA) has warned.
Commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF), the AA forecasted that petrol would increase by up to 55 cents a litre in May, diesel by around 39 cents a litre, and illuminating paraffin by 41 cents a litre.
"The loss of confidence by investors, and the sovereign ratings downgrades by ratings agencies Fitch and S&P, have led to the Rand slipping heavily against the US dollar, down from around R12.35 at the beginning of the month to its current position of around R13.40," the AA said in a statement.
The Rand's weakness is said to have contributed 3 quarters of the expected fuel price increases in May, with hikes in international petroleum prices accounting for the balance.
"However, it is a long time till month end, and there is no certainty that the impact of the downgrades has been fully priced into the economy. The picture for May could be substantially different," the AA concluded.
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