Currency - Comments & Opinions
June 25, 2010
Upside to euro downside
Sasha Planting
Financial Mail
The euro sank to a four-year low against the dollar last week amid fears that Hungary, alongside Spain, Portugal and Italy, could suffer a Greek-style debt crisis. Economist Nouriel Roubini of the US predicts a period of stagnation, if not recession, for the eurozone. This would knock SA. Europe is its biggest trading partner. Strangely, in the midst of the doom and gloom, the depressed euro and relatively buoyant German economy are having a positive effect on certain SA companies: furniture firm Steinhoff, which is headed by Markus Jooste, in particular, but also paper manufacturers Sappi and Mondi.
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June 18, 2010
Bank favours market
Claire Bisseker
Financial Mail
In the same week that finance minister Pravin Gordhan held talks with manufacturers to discuss their insistence that government intervene to weaken the rand, the SA Reserve Bank reiterated its commitment to a hands-off approach. Last month, the Manufacturing Circle, a lobby group of large manufacturers, signed a joint declaration with SA’s three trade union federations calling on government to intervene “to ensure an appropriately valued, competitive and stable currency”. The rand has appreciated by almost 15% against the euro this year and has recently come back strongly against...
June 10, 2010
Robust rand reaches fresh high ahead of World Cup
Mariam Isa
Business Day
The robust rand has taken a bow on the eve of the Soccer World Cup, rallying to a near three-and-a-half-year peak against the euro and clawing back some of its recent losses against the dollar. At one stage yesterday the volatile currency traded at R9,21 against the European currency, its strongest since January 2007 and taking its gains versus the euro in the year so far to about 14%. The rand should benefit from the world’s biggest sports event, which kicks off tomorrow, and could show its...
May 28, 2010
Laying out the tools
Carol Paton
Financial Mail
National treasury director-general Lesetja Kganyago says he and his officials are willing to debate the strength of the rand, but it is time to talk about the nuts and bolts of policy options. Kganyago is annoyed that the Manufacturing Circle, a lobby group of manufacturers, described treasury’s attitude to policies on the rand as “intransigent”, as discussions with them are under way. The Manufacturing Circle — representing large companies such as Altron and Bell Equipment as well as the National Association of Automotive Component & Allied Manufacturers —
May 21, 2010
Opponents of strong currency must look at the facts
Tim Cohen
Business Day
A grand lobby has now formed ranging from the unions to influential parts of the government and now business icons such as Sasol. They are all ranged in a coalition against this new, dire threat to our lives, the “strong” rand. Only there’s a problem: the rand isn’t that strong. And even if it was, it’s not hurting. And even if it was hurting, there is not much anyone can do about it. And it appears to be weakening anyway, as it plunged nearly 3% yesterday, breaking through the R8/$ level. “This is a big argument about nothing,” says Rand Merchant Bank currency expert John Cairns.
May 05, 2010
Greek contagion affects rand, shares
Edward West
Business Day
Global contagion from Greece’s debt problems weakened the rand yesterday and sent global shares tumbling. The JSE was caught in the whirlwind and the FTSE/JSE all share index slid 2,4%, led by sinking resources stocks, particularly platinum shares which fell 4,6%, and bank and life insurance stocks. The rand was more than 2% weaker against the dollar in late trading, over yesterday’s close of R7,4075, and was 1,9% weaker at R7,5835 in the evening. The FTSE 100 index in London sank 2,5%, Germany’s DAX slid as much as 2,1% and France’s CAC 40 index ended 3,6% lower.
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June 11, 2010
No to a weak rand
John Loos
Financial Mail
Nurses, teachers and a host of other highly skilled and much needed labour flock in that direction. Some visit only temporarily with the view to earning “real money” before returning to their own countries. The highest-profile skills drain from SA, as well as from New Zealand and Australia (I add those countries before some cite crime as the only reason) has been in the professional rugby industry, where SA and New Zealand have long since been proud of their “competitive advantage”. Key players have trickled off to England and France in search of little apparent benefit other than larger paychecks.
May 28, 2010
Rand may be key to Bank’s next rates move
Mariam Isa
Business Day
News that inflation is falling faster than anticipated has revived speculation that the Reserve Bank may cut interest rates again this year, particularly if the rand keeps clawing back lost ground. Most analysts are sticking to the view that the Bank will opt to keep interest rates steady at near 30- year lows, especially after data early this week showed that growth accelerated strongly in the first quarter of this year. But a bold few are pointing out that the surprise fall in inflation to 4,8% last month — a four-year low — means that the price outlook could be benign enough to provide scope for lower lending rates.
May 21, 2010
Wages of a rand peg
Nazmeera Moola
Financial Mail
Several years ago South Africans were horrified at the thought that the rand was in danger of reaching “7-11” — or seven to the US dollar and 11 to the pound. This would leave the rand excessively weak. Today many South Africans are horrified at the strength of the currency at 7-11. Last week, Business Day reported that a group of manufacturers want government to weaken the rand and peg it at R10/US1, as this would enable them to compete with East Asia. Given current prices, a 30%-odd weakening of the exchange rate would boost SA’s competitiveness considerably.
May 21, 2010
Rand, JSE reel as euro woes hit SA
Edward West
Business Day
The rand and JSE were hammered yesterday as a week-long sell-off of global stocks intensified while leaders in Europe continued their struggle to contain fallout from the region’s debt crisis. Negative sentiment was worsened by an unexpected rise in US jobless claims figures for last week, adding to worries about the pace of the global recovery. Japan said its economy grew 4,9% in the first quarter, less than the 5,5% consensus forecast. Heightened risk aversion in global markets caused the JSE all share index to plunge 3,1%, while the rand weakened significantly, falling nearly 3% to R8,08/$, breaking through the R8/$ mark for the first time in six months.
May 04, 2010
The Bottom Line
Nick Wilson
Business Day
Business organisations should be aware that some quite subtle, but potentially big changes have occurred in the way exchange controls on hedging currencies are implemented. Under the old system, it was illegal to use hedges with the intention of making a profit. That remains under the new system, which is seriously ill-advised. What will change is that companies will now have the ability to manage currency risk holistically. In the past, because it was illegal to hedge for a profit, the specific reason for the hedge had to be identified. Furthermore, that particular risk needed to be “firm and ascertainable”.
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MORE ARTICLES:
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‘Overvalued’ rand constrains economy
April 23, 2010
No accounting for a rand with a life of its own
March 01, 2010
Lessons for SA from China’s currency model
March 17, 2010
Marcus springs surprise rate cut
March 26, 2010
Exporters, investors at odds on rand strength
March 11, 2010
Rand falls against dollar boosted by Fed rate move
February 22, 2010
Is the buck really set to come over all bullish?
February 21, 2010
Inflation targeting, rand in spotlight
February 16, 2010
Rand weakens after Chinese bank move
February 15, 2010
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