The ZAR Exchange Rate Thread

[Vrotappel]

Making our exports competitive will allow many of our businesses to export in far greater quantities.

What businesses would that be? Growth is slowing (gdp numbers yesterday). Try to see the bigger picture here. Maybe people will take you seriously if you can admit that you are wrong.

 

[kingrob]

Folks, please do not purchase anything from a US online store now, unless you have too much money.

 

[antowan]

WTF is happening here!

 

[Seriously]

Yeah, thats it.

SA is full of unwitting racists.
Black leaders will eventually fail. SA will become like Zimbabwe. etc etc
Despite all the data suggesting that the comparison itself is ludicrous

You said it. Looking at the rest of Africa the obvious is spelled out. I'm so glad you can at least realize such truth and facts and see it coming.

As for racist? ........... well you must hurt badly!
Viva!

 

[JStrike]

That is just why I asked the question. I understand it is good for some sectors in some kind of way. But it also impacts the same sectors when they import equipment.

That is correct

 

[zippy]

Who said anything about sentiment? Why would the local population sell their bonds at an absolutely **** rate, when they can buy bonds off of the risk averse foreigners at a steal of a deal.

Why is there a difference between the risk assessment made by locals as opposed to the risk assessment made by foreigners ?

That makes no sense. Are you saying that foreign investors are making incorrect risk calculations ?

Remember that there are other bonds. Some better, some worse.

I don't believe that this sell off is due only to foreigners selling. It's due to any holder selling, and a general sell trend. Possibly some South African holders can't sell due to other factors, but they certainly aren't going to rush buy while in the middle of a downward trend, surely?

 

[JStrike]

What businesses would that be? Growth is slowing (gdp numbers yesterday). Try to see the bigger picture here. Maybe people will take you seriously if you can admit that you are wrong.

Wrong that a weaker rand (to a point) is good for the economy? Oh really? Why don't you take a look at around what the major economists in SA have been saying over the last year

 

[MKFrost]

And there goes the R10 level...

Broke through the R10 level against the US Dollar just after 2 this afternoon right after Zuma's speech which was intended to calm the markets.... had just the opposite effect

 

[Garson007]

Why is there a difference between the risk assessment made by locals as opposed to the risk assessment made by foreigners ?

A lot. We do not import everything and neither are our prices on par with the rest of the world. Unless South Africans honestly believe that inflation will be monstrous, there is zero risk in buying bonds - especially when the secondary market is offering you such good deals. Foreigners however have to deal with their own local inflation and an exchange rate that's in free fall.

That makes no sense. Are you saying that foreign investors are making incorrect risk calculations ?

Not at all. They're cutting their losses while they still can.

Remember that there are other bonds. Some better, some worse.

Of course.

I don't believe that this sell off is due only to foreigners selling. It's due to any holder selling, and a general sell trend. Possibly some South African holders can't sell due to other factors, but they certainly aren't going to rush buy while in the middle of a downward trend, surely?

There really is no reason for South Africans to sell, unless they perceive there to be a more stable (liquid asset) investment and there isn't something more stable than local bonds.

 

[Mila]

That is correct

So you said not mining what are you talking about?

 

[dlk001]

Why is there a difference between the risk assessment made by locals as opposed to the risk assessment made by foreigners ?

Risk assessment include a subjective perception of the probability of a something going wrong and how concerned we are with the consequences.

I suspect locals who are close/live with the problem will have a different risk appetite than foreigners who are far from the situation.

In my local environment, I tend to have an idea of the known unknowns and how to manage the risk. When investing in foreign environment, you have to deal with unknown unknowns (more perception). and make assumptions.

 

[JStrike]

So you said not mining what are you talking about?

Well, mining is no longer that big a sector in SA (But still substantial).
I was referring to the services sector, retail which are substantial and growing sectors. And they could really do with a more competitive Rand. It will also help the primary sectors as well, but I am less personally interested in that

 

[OrbitalDawn]

Wrong that a weaker rand (to a point) is good for the economy? Oh really? Why don't you take a look at around what the major economists in SA have been saying over the last year

You mean like Mike Schüssler, in the last hour?

"Economist Mike Schüssler said the rand’s weakness is bad for the economy. We’re probably going to see higher petrol and food prices and all other things which are priced in U.S dollars all around us."

 

[Mila]

Well, mining is no longer that big a sector in SA (But still substantial).
I was referring to the services sector, retail which are substantial and growing sectors. And they could really do with a more competitive Rand. It will also help the primary sectors as well, but I am less personally interested in that

In which sector are you interested?

 

[dlk001]

Well, mining is no longer that big a sector in SA (But still substantial).

True when we look at mining solely as a raw material exporter. However, the social multiplier of mining is very significant for South Africa with a reported dependency ratio of about 10:1 (The downstream value addition from mining). In addition to the direct contribution, mining also has an indirect multiplier effect on the gross domestic product, giving rise to a “real” contribution to South Africa’s GDP of between 15-20%.

e.g. mining sector buys services from manufacturing, automotive, consulting, financial , electricity and water inputs. Also mining fuels the country's economy in terms of primary energy needs. It is estimated that for every direct mining job, two jobs are created. This is likely to be true of you consider the growth in Brazil, Chile, Australia attributed to resource sector.

We are not as dirty as people like to think....

 

[JStrike]

You mean like Mike Schüssler, in the last hour?

"Economist Mike Schüssler said the rand’s weakness is bad for the economy. We’re probably going to see higher petrol and food prices and all other things which are priced in U.S dollars all around us."

That is one economist.
There are many opinions on the subject in the last year, and it has been quite extensively debated, most of the discussions are available online

 

[JStrike]

In which sector are you interested?

Tertiary sector

 

[Seriously]

That is one economist.
There are many opinions on the subject in the last year, and it has been quite extensively debated, most of the discussions are available online

So lets see which one hits our pockets the worst. Ouch I just had to cancel all my import plans.

 

[JStrike]

True when we look at mining solely as a raw material exporter. However, the social multiplier of mining is very significant for South Africa with a reported dependency ratio of about 10:1 (The downstream value addition from mining). In addition to the direct contribution, mining also has an indirect multiplier effect on the gross domestic product, giving rise to a “real” contribution to South Africa’s GDP of between 15-20%.

e.g. mining sector buys services from manufacturing, automotive, consulting, financial , electricity and water inputs. Also mining fuels the country's economy in terms of primary energy needs. It is estimated that for every direct mining job, two jobs are created. This is likely to be true of you consider the growth in Brazil, Chile, Australia attributed to resource sector.

We are not as dirty as people like to think....

Yep, all true

 

[Mila]

Tertiary sector

Servicing what/ who?