Further instability in Rand/dollar exchange rate could offset possible
Current data is predicting a drop in fuel prices in July, but the Automobile Association (AA) has advised against premature celebrations. "The good news is that preliminary data from the Central Energy Fund (CEF) for the middle of July is showing firm reductions in international petroleum prices," the AA said.
"The exchange rate picture is less positive, with the Rand having steadily depreciated against the US dollar since the end of last month."
After a period of stability towards the last week of June, the exchange rate has climbed from R12.20 to the dollar to almost R12.40 to the dollar. The drop in international petroleum prices has kept ahead of the exchange rate though, meaning that petrol is currently in line for a reduction of 28 cents a litre, with diesel and illuminating paraffin set for a decline of around 50 to 55 cents a litre.
However, the AA cautioned that a flattening of international or continued depreciation of the Rand against the dollar could reverse this trend. "The fuel price has shown increasing volatility in recent months, and we advise motorists to maintain a prudent stance towards their fuel expenditure," the Association concluded.
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