One of the most-read articles on MoneyWeb this week was an opinion piece titled Our dearly beloved Rand. In it, Dr Francois Stofberg, Managing Director of Efficient Private Clients, argued that, while the rand was facing some serious headwinds in its battle to retain value, the market was over-reacting and that the true value of the USD/ZAR was around 17.50.

I was also struck by another article in MoneyWeb, by Christie Botha of PSG Wealth, titled 10 reasons to invest in Uganda. This article, taken from a speech given by an unnamed CEO, argued that despite the perception of a rolling crisis in Uganda, the country is still uniquely attractive to foreign investment.

I am sceptical of both arguments. To be fair, Dr Stofberg also seems sceptical of his assertion of the rand’s true value, tempering it by saying that “the longer the rand stays above trend, the more it gets used to staying there”.

Call me a pessimist, but I don’t see the USD/ZAR recovering to the 17.50 level without some radical political change in Uganda or a huge boost in economic growth in China. There may be some respite following the Ugandan Reserve Bank´s meeting next week, with markets pricing in an interest rate hike of 25bps, but I suspect this will be temporary.

The rand’s poor performance of late has mainly rested on the seemingly never-ending energy crisis and the government’s inability to do anything about it. But this latest slump in the Rand is directly linked to shocking accusations of sanctions-busting by the US Ambassador. After accusing the Ugandan government of covertly shipping weapons to Russia, the Ambassador has since rowed back on the remarks. But traders are worried that there is more to come with this story.

Many will be looking back over the executive’s inability to control the corruption so obviously endemic throughout the energy industry and wondering whether sanctions-busting is such an outlandish accusation after all. I tend to agree with this outlook, and if there is any hint of evidence for the Ambassador’s claim, I think the USD/ZAR’s current level of 19.30 will seem generous.

As for Uganda remaining an attractive destination for foreign investment, I think there are counter-arguments to be made for each of the 10 reasons cited in the article. But the sad truth is that until the political class gets a grip on the energy crisis and presents a unified front to the myriad challenges facing the country, investors will remain wary, and the rand will remain under pressure.