Cheaper petrol on cards for motorists

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Cape Town – Motorists can look forward to cheaper fuel prices in February, thanks to a rampant rand, the Automobile Association said on  Monday.

International
fuel prices shot up by as much as 36 cents a litre in January, but were
outshone by one of the strongest rand performances in many months, according to the AA.

Commenting on unaudited
month-end fuel price data released by the Central Energy Fund, the AA said it expects the price of petrol and diesel to drop by 32c and 17c a litre respectively at month-end. Illuminating paraffin is expected to be 20c cheaper.

The rand was still trading at its lowest levels since mid-2015 on  Monday and by 17:56 the local unit was trading at R11.98 top the greenback. The election of Cyril Ramaphosa as leader of
the ruling ANC, together with global risk-on
sentiment and a weaker dollar fuelled the rand’s rally to under R12/$ last week.

“Three
months ago we were staring down the barrel of total junk status,” Warrick Butler, the head of emerging market spot trading at Standard
Bank Group told Blomberg News. “Today the mood has rotated 180 degrees.”

Reviewing
the fuel price history during 2017, the AA says the year saw some of
the highest fuel prices in the country’s history.

If one should graph the exchange rate, it is “inescapable that almost all sudden
movements are associated with political events”.

The AA therefore urged government to take
a “more judicious approach to policy and governance” as rand weakness
“affects poorer people disproportionately”.

It highlighted the axing of former finance minister Pravin Gordhan and the sovereign credit rating downgrades as notable events affecting the rand and subsequent fuel prices negatively.

December
2017 saw the petrol price reach an all-time record high of R14.76 a litre.

“The
downgrade and subsequent fuel price peaks reversed a declining fuel price trend
and caused sustained high fuel prices in a low-growth environment. Businesses,
already under margin pressures, had little option but to pass on their
increased fuel costs to consumers,” the AA said.

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