ECONOMY
Petrol seen jumping to record high
Posted Thu, 20 Apr 2006
The petrol price could rise to a record high in June, possibly
rising by 55 cents a litre judging by this week's commodity boom,
economists said on Wednesday.
It was estimated that the petrol price could rise by between 30
and 35 cents per litre next month and by a further 15 to 20 cents
in June, Econometrix senior economist Tony Twine said.
"All in all, between 45 and 55 cents per litre — if crude oil
stays at 72 dollars per barrel and the exchange rate remains close
to R6 to the dollar," Twine said.
Economist Chris Hart of Absa said the petrol price could rise by
at least 50 cents per litre at the beginning of May, but added that
the rand's strength would "shield us".
"We are going to be paying more on petrol," he said, putting the
hike at 30 cents per litre "at the moment" and between 40 and 50
cents early next month.
He said the rand's strength was driven by a weak dollar and
stronger precious metals like gold and platinum.
Whatever action
was taken on Iran's nuclear programme, that
action would push the price of precious metals up even further, he
said.
"The strength of the rand is keeping inflation at bay," Hart
said.
Lumkile Mondi, an economist at the Industrial Development
Corporation, said South Africa, the biggest storage area of
precious metals in the world, was benefiting from the commodity
boom.
"It's a very, very important psychological boost for South
Africa. It's a good story for South Africa," Mondi said.
He said he hoped the Reserve Bank would lower interest rates to
make sure the rand "remains competitive" and that the export
sector, was profitable.
Uncertainty over Iran's nuclear programme was helping the
commodity boom in South Africa, he said, adding that this would
help the export sector to create much-needed jobs.
In the past few years, this sector shed many jobs as a result of
the rand's stronger value.
Mike Schussler, an economist from T-Sec, said: "The
commodity
boom is certainly going to be good for keeping our interest rates
lower going forward."
But Twine said given the uncertainty on the oil price at the
moment, the Reserve Bank would "hate" to cut interest rates as that
would "strengthen the rand even further".
He said the rand strengthened by about 20 cents against the dollar
and with about eight to nine cents against the euro over the past two days.
Early on Wednesday, the rand broke through the key R6 mark
against the dollar, to trade at R5.99.
Forex dealers said the currency was buoyed by the surge in the
gold price, which was trading at a 25-year high on Wednesday and
the firmer euro, SABC radio news reported.
The report, quoting forex dealers, said this was due to South
Africa's neutral position over Iran's nuclear programme.
The surge in the gold and platinum prices have given the JSE
Securities Exchange SA a major boost.
The bourse opened firmer with the overall index gaining
one
percent. the gold index shot up three percent as the precious metal
tested the 25-year peak, station reported.
Sapa
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