What the South African rand should be worth

AlphaWealth’s Andrew Flavell has stated what that the rand’s value against the US dollar should be.

By - February 23, 2016 Share on LinkedIn
Rand Dollar Notes

AlphaWealth’s Andrew Flavell has stated that the rand’s fair value average against the US dollar is R10.98.

Flavell made the calculation using multiple variables, and based the value on information available from January 2016.

“There have been five years of headwinds for emerging markets. In fact there has been a perfect storm for emerging markets with commodity-backed economies,” said Flavell.

“So while some may dub this the Zuma Effect, it really is a macro theme.”

What the rand should be worth vs the US dollar

January 2016 Implied USD/ZAR value
Interest rate differential R14.16
Cash rate differential R14.51
Inflation rate differential R9.55
Big Mac index R5.68
Fair value given average R10.98
Current spot R15.24

“At current levels, we are priced in line with the Russian Rouble,” said Flavell.

“Whether this is fair or not really depends on one’s view of the GDP growth forecasts, the ability of the government to be fiscally prudent, the commodity cycle, the carry trade, amplitude of the interest rate cycle, and foreign investment.”

Where money managers think the rand will go

Flavell said AlphaWealth also surveyed the managers that make up its equity hedge strategy locally, to gain insight in their rand vs US dollar predictions for 2016.

SA Hedge Fund USD/ZAR
A R15-R17
B R16
C R16
D R16.15

More on the rand

The weak rand’s impact on your ADSL ISP

ShowMax hit hard by weak rand

Share your thoughts

Join the conversation

Connect with Us

androidappletwitterfacebookgoogleplusfeednewsletter

Poll

Which mobile operator do you think offers the best value-for-money data products?

View Results

Loading ... Loading ...

More News

Top 10 most pirated movies of the week

Movie film piracy

TorrentFreak has released its list of the most downloaded movies through BitTorrent over the past week.

Nigeria allegations unfounded: MTN

MTN logo yellow

MTN Nigeria has strongly refuted allegations of improper repatriation of funds over a period of 10 years.

Leading software house set on hiring more than just a Software Developer, are you it?

Programmer working computer code

SMSPortal is looking for top class software developers to join a great team working on cutting edge software.

Do developers really add value?

main_image

Of course developers add value. What kind of an question is that? Do we really need to defend our place in the business?

Free MyBroadband Newsletter
×