SA Current financial status

[Moto Guzzi]

Given everything heard on radio, read in the press, something does not add up.

Seeing that the Banks Credit Fiasko scenario was predicted a couple of years back in SA, and lead to the new credit law, although a bit late, econimists keep on claiming SA banks are ok and safe, but if we are so ok, and UK and USA so screwd up, why does the rand fall and not rise ?

Are they draining our cash away slowly but surely out of this country?


Exports:Where to if nobody is going to be in a spending mood overseas ?

I see bottlenecks coming, things dont add up.

 

[PeterCH]

Investors are moving to more stable currencies and economies or at least
established ones, chiefly Japanese (Yen is rising terribly and the Japanese
want it low) and the Dollar. Check how low Iceland's currency plummeted
(30%) and look at AUS Dollar too.

 

[Albereth]

Just to simplify PeterCH's response -

Foreign investors are selling their South African shares and moving to currency - so you can think of it as a greater demand for dollars, etc. As the demand increases so does the cost of the dollar.

On top of that, there is a greater demand for liquidity, so those dollars are in short supply in their own domestic environment.

Our cash isn't being drained away - nobody wants rands, so the value of the rand drops.

 

[PeterCH]

By all means your response is more simplified and more logical. Thanks.

 

[alloytoo]

Just to simplify PeterCH's response -

Foreign investors are selling their South African shares and moving to currency - so you can think of it as a greater demand for dollars, etc. As the demand increases so does the cost of the dollar.

On top of that, there is a greater demand for liquidity, so those dollars are in short supply in their own domestic environment.

Our cash isn't being drained away - nobody wants rands, so the value of the rand drops.

Of course, as with the Yen, the Yanks can't afford a terribly strong dollar for long either.

 

[PeterCH]

Of course, as with the Yen, the Yanks can't afford a terribly strong dollar for long either.

But the Yanks depend less on exports than the Japanese (% of GDP?)
Secondly, the Dollar was already weak to begin with.