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Sign up with GoogleThe ZAR Exchange Rate Thread
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gregmcc
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Ouch!!! 10.25 to the $.
Just missed it by a whisker, turned at R10.3373. Should pull back a bit now but doubt strongly whether we will go below R10.00 this week.
LazyLion
King of de Jungle
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Global Factors Affecting the Rand
Global factors are the main contributors to the current volatility of the rand, analysts said on Wednesday.
The rand reached its four-year low of R10.28 against the dollar on Tuesday, before recovering to R10 at midday on Wednesday.
However, the rand was not the only currency suffering volatility. The Australian dollar and New Zealand dollar have also been under pressure.
Dawie Roodt, chief economist at Efficient Group, said the main reason for the volatility was changes in the US economy.
"The Americans indicated that their stimulus of their economy would gradually be reduced."
He said to stimulate the economy, the US had printed a lot of money which was distributed over the world.
"Now they are saying that they are going to reduce this stimulus and the result of that is that money will flow out of the countries..."
Another factor on the rand was the slow-down in the economic growth of China, which imported South African commodities.
"Countries like South Africa and Australia are commodity-producing countries, and their currencies are taking a knock because they don't export so many commodities anymore," Roodt said.
There were also domestic factors which added pressure on the rand's strength.
"Our economy is doing very badly. Secondly, we've got these long issues in the mines... nobody wants to invest in a country that is so unstable."
Roodt said the disadvantages of a weaker currency outweighed the possible benefits.
"The most obvious disadvantage is that we are all poorer because of the rand's weakness. Everything that is denominated in rands is worth less today than before the collapse of the currency."
This included wages, shares, houses, pensions, and gold.
Roodt said some prices adjusted automatically and quickly to the fall in the rand, like share prices and the oil price. In most instances however it would take a long time for all prices to catch up to previous levels.
Wages and salaries were examples of prices that would take time to reach previous levels, he said.
"Oil prices, and eventually the price of petrol, will go up regardless if we buy more or less oil on the international markets," he said.
John Cairns, currency strategist at the Rand Merchant Bank, echoed Roodt's sentiment and said the rand had experienced swings of between 20 to 30 cents a day.
"The rand is trading at exactly the same level as other emerging markets and its been driven by the [US] federal [reserve system] and its impact on domestic bonds."
Cairns said in the past few days South African bond yields came down substantially.
"We've seen foreigners selling our bonds very aggressively... We really need foreigners to come and start buying our bonds again. That is what will stabilise our bonds and currency market."
Commodity prices affected the rand, but their effect was long-term.
"For the moment it is not having an impact on the short-term movement of the rand. That is all driven by the bonds and what is happening offshore," said Cairns.
South Africa's domestic problems also affected the rand. Among these were strikes, worries bout the long-term economic future, poor gross domestic product, and concerns about possible credit rating downgrades.
"There is just a very negative sentiments towards South Africa, particularly from South Africans, and that is filtering through to international investors," Cairns said.
"What all these local negatives are doing is adding to the pressure on the rand. But the main factor is really what is happening internationally."
Source : Sapa /pd/hdw/ad/th
Date : 12 Jun 2013 13:21
Global factors are the main contributors to the current volatility of the rand, analysts said on Wednesday.
The rand reached its four-year low of R10.28 against the dollar on Tuesday, before recovering to R10 at midday on Wednesday.
However, the rand was not the only currency suffering volatility. The Australian dollar and New Zealand dollar have also been under pressure.
Dawie Roodt, chief economist at Efficient Group, said the main reason for the volatility was changes in the US economy.
"The Americans indicated that their stimulus of their economy would gradually be reduced."
He said to stimulate the economy, the US had printed a lot of money which was distributed over the world.
"Now they are saying that they are going to reduce this stimulus and the result of that is that money will flow out of the countries..."
Another factor on the rand was the slow-down in the economic growth of China, which imported South African commodities.
"Countries like South Africa and Australia are commodity-producing countries, and their currencies are taking a knock because they don't export so many commodities anymore," Roodt said.
There were also domestic factors which added pressure on the rand's strength.
"Our economy is doing very badly. Secondly, we've got these long issues in the mines... nobody wants to invest in a country that is so unstable."
Roodt said the disadvantages of a weaker currency outweighed the possible benefits.
"The most obvious disadvantage is that we are all poorer because of the rand's weakness. Everything that is denominated in rands is worth less today than before the collapse of the currency."
This included wages, shares, houses, pensions, and gold.
Roodt said some prices adjusted automatically and quickly to the fall in the rand, like share prices and the oil price. In most instances however it would take a long time for all prices to catch up to previous levels.
Wages and salaries were examples of prices that would take time to reach previous levels, he said.
"Oil prices, and eventually the price of petrol, will go up regardless if we buy more or less oil on the international markets," he said.
John Cairns, currency strategist at the Rand Merchant Bank, echoed Roodt's sentiment and said the rand had experienced swings of between 20 to 30 cents a day.
"The rand is trading at exactly the same level as other emerging markets and its been driven by the [US] federal [reserve system] and its impact on domestic bonds."
Cairns said in the past few days South African bond yields came down substantially.
"We've seen foreigners selling our bonds very aggressively... We really need foreigners to come and start buying our bonds again. That is what will stabilise our bonds and currency market."
Commodity prices affected the rand, but their effect was long-term.
"For the moment it is not having an impact on the short-term movement of the rand. That is all driven by the bonds and what is happening offshore," said Cairns.
South Africa's domestic problems also affected the rand. Among these were strikes, worries bout the long-term economic future, poor gross domestic product, and concerns about possible credit rating downgrades.
"There is just a very negative sentiments towards South Africa, particularly from South Africans, and that is filtering through to international investors," Cairns said.
"What all these local negatives are doing is adding to the pressure on the rand. But the main factor is really what is happening internationally."
Source : Sapa /pd/hdw/ad/th
Date : 12 Jun 2013 13:21
LazyLion
King of de Jungle
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- Mar 17, 2005
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- 105,603
Business Confidence Down: BER
Business confidence in the manufacturing sector fell by eight index points in the second quarter of 2013, the Bureau for Economic Research (BER)said on Wednesday.
The BER manufacturing business confidence declined to 34.
BER economist Lissette IJssel de Schepper (SUBS: CORRECT), said the decline partially erased gains made in the previous two quarters, as the index stood just above the level it reached in the third quarter of 2012.
She said the fall in manufacturing business confidence highlighted a deteriorated sentiment in the sector.
A persisting sense of uncertainty was also reflected in the rating of the general political climate as a constraint on business. The indicator rose further from its multi-decade record high.
Contrasting the positive experience during the previous quarter, export performance worsened notably.
"While manufacturers were expecting further gains during the second quarter of 2013, both the indicators for export sales and order volumes fell into negative territory," she said.
Despite the weak exchange rate, manufacturers were not optimistic about export performance in the next quarter.
"It could also be argued that the recent exchange rate movements have been too sudden for manufacturers to fully benefit from the competitive edge," De Schepper said.
Another development likely depressing manufacturers' sentiment was the indication that profitability had come under pressure.
The rate of increase in the average production costs remained unchanged at a fairly high level, but producers reported lower average selling price inflation for both domestic and export prices.
Production volume growth slowed compared to the previous quarter, but remained in positive territory.
In line with the moderation in production growth, manufacturers reported a decline in employment and average hours worked per factory worker.
"A decline in the average hours worked usually does not bode well for employment in the industry," De Schepper said.
Other indicators confirmed there was a significant slack in capacity within the industry.
However, manufacturers were optimistic about domestic demand conditions during the next quarter.
"Producers might be anticipating a demand shift towards import-replacing [locally produced] products, due to the weaker exchange rate making imported manufactured goods more expensive," said De Schepper.
Source : Sapa /pd/hdw/jk/th
Date : 12 Jun 2013 14:09 OrigID : LP713260
Business confidence in the manufacturing sector fell by eight index points in the second quarter of 2013, the Bureau for Economic Research (BER)said on Wednesday.
The BER manufacturing business confidence declined to 34.
BER economist Lissette IJssel de Schepper (SUBS: CORRECT), said the decline partially erased gains made in the previous two quarters, as the index stood just above the level it reached in the third quarter of 2012.
She said the fall in manufacturing business confidence highlighted a deteriorated sentiment in the sector.
A persisting sense of uncertainty was also reflected in the rating of the general political climate as a constraint on business. The indicator rose further from its multi-decade record high.
Contrasting the positive experience during the previous quarter, export performance worsened notably.
"While manufacturers were expecting further gains during the second quarter of 2013, both the indicators for export sales and order volumes fell into negative territory," she said.
Despite the weak exchange rate, manufacturers were not optimistic about export performance in the next quarter.
"It could also be argued that the recent exchange rate movements have been too sudden for manufacturers to fully benefit from the competitive edge," De Schepper said.
Another development likely depressing manufacturers' sentiment was the indication that profitability had come under pressure.
The rate of increase in the average production costs remained unchanged at a fairly high level, but producers reported lower average selling price inflation for both domestic and export prices.
Production volume growth slowed compared to the previous quarter, but remained in positive territory.
In line with the moderation in production growth, manufacturers reported a decline in employment and average hours worked per factory worker.
"A decline in the average hours worked usually does not bode well for employment in the industry," De Schepper said.
Other indicators confirmed there was a significant slack in capacity within the industry.
However, manufacturers were optimistic about domestic demand conditions during the next quarter.
"Producers might be anticipating a demand shift towards import-replacing [locally produced] products, due to the weaker exchange rate making imported manufactured goods more expensive," said De Schepper.
Source : Sapa /pd/hdw/jk/th
Date : 12 Jun 2013 14:09 OrigID : LP713260
LazyLion
King of de Jungle
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- Mar 17, 2005
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- 105,603
Decisive Leadership Needed for Economy
A decline of business confidence in the manufacturing sector adds credence to calls for decisive leadership, the Manufacturing Circle said on Wednesday.
Executive director Coenraad Bezuidenhout said the decline in business confidence added credence to the call made by SA Reserve Bank governor Gill Marcus for decisive leadership.
"It reflects... that allowing for coherent policy execution on matters important to the economy to be subverted at every seeming advance by competition in Cabinet and outside... does not bode well for investor confidence," he said.
According to the Bureau for Economic Research (BER), business confidence in the manufacturing sector fell by eight index points in the second quarter of 2013, to 34.
Bezuidenhout said a climate that was conducive to investment growth needed a strong hand on the tiller of the economy, that could make decisions and stick to them.
BER economist Lissette IJssel de Schepper (SUBS: CORRECT), said the decline partially erased gains made in the previous two quarters, as the index stood just above the level it reached in the third quarter of 2012.
She said the fall in manufacturing business confidence highlighted a deteriorated sentiment in the sector.
A persisting sense of uncertainty was also reflected in the rating of the general political climate as a constraint on business. The indicator rose further from its multi-decade record high.
Contrasting the positive experience during the previous quarter, export performance worsened notably.
"While manufacturers were expecting further gains during the second quarter of 2013, both the indicators for export sales and order volumes fell into negative territory," she said.
Added to changes in the exchange rate, another development likely depressing manufacturers' sentiment was the indication that profitability had come under pressure.
The rate of increase in the average production costs remained unchanged at a fairly high level, but producers reported lower average selling price inflation for both domestic and export prices.
Production volume growth slowed compared to the previous quarter, but remained in positive territory.
In line with the moderation in production growth, manufacturers reported a decline in employment and average hours worked per factory worker.
"A decline in the average hours worked usually does not bode well for employment in the industry," De Schepper said.
Other indicators confirmed there was a significant slack in capacity within the industry. However, manufacturers were optimistic about domestic demand conditions during the next quarter.
"Producers might be anticipating a demand shift towards import-replacing [locally produced] products, due to the weaker exchange rate making imported manufactured goods more expensive," said De Schepper.
Source : Sapa /pd/hdw/ad/th
Date : 12 Jun 2013 16:29
A decline of business confidence in the manufacturing sector adds credence to calls for decisive leadership, the Manufacturing Circle said on Wednesday.
Executive director Coenraad Bezuidenhout said the decline in business confidence added credence to the call made by SA Reserve Bank governor Gill Marcus for decisive leadership.
"It reflects... that allowing for coherent policy execution on matters important to the economy to be subverted at every seeming advance by competition in Cabinet and outside... does not bode well for investor confidence," he said.
According to the Bureau for Economic Research (BER), business confidence in the manufacturing sector fell by eight index points in the second quarter of 2013, to 34.
Bezuidenhout said a climate that was conducive to investment growth needed a strong hand on the tiller of the economy, that could make decisions and stick to them.
BER economist Lissette IJssel de Schepper (SUBS: CORRECT), said the decline partially erased gains made in the previous two quarters, as the index stood just above the level it reached in the third quarter of 2012.
She said the fall in manufacturing business confidence highlighted a deteriorated sentiment in the sector.
A persisting sense of uncertainty was also reflected in the rating of the general political climate as a constraint on business. The indicator rose further from its multi-decade record high.
Contrasting the positive experience during the previous quarter, export performance worsened notably.
"While manufacturers were expecting further gains during the second quarter of 2013, both the indicators for export sales and order volumes fell into negative territory," she said.
Added to changes in the exchange rate, another development likely depressing manufacturers' sentiment was the indication that profitability had come under pressure.
The rate of increase in the average production costs remained unchanged at a fairly high level, but producers reported lower average selling price inflation for both domestic and export prices.
Production volume growth slowed compared to the previous quarter, but remained in positive territory.
In line with the moderation in production growth, manufacturers reported a decline in employment and average hours worked per factory worker.
"A decline in the average hours worked usually does not bode well for employment in the industry," De Schepper said.
Other indicators confirmed there was a significant slack in capacity within the industry. However, manufacturers were optimistic about domestic demand conditions during the next quarter.
"Producers might be anticipating a demand shift towards import-replacing [locally produced] products, due to the weaker exchange rate making imported manufactured goods more expensive," said De Schepper.
Source : Sapa /pd/hdw/ad/th
Date : 12 Jun 2013 16:29
LazyLion
King of de Jungle
- Joined
- Mar 17, 2005
- Messages
- 105,603
ANC Welcomes Zuma's Remarks
The ANC has welcomed President Jacob Zuma's remarks that the presidency will work to boost confidence in the economy.
"The ANC welcomes the commitment made by the presidency to strengthen confidence in the economy, particularly seeking to intervene to halt the instability in the mining sector," African National Congress spokesman Jackson Mthembu said in a statement on Wednesday.
"The ANC has noted the challenges that still remain, particularly in relation to our advance for socio-economic freedom," he said.
Opening debate in the National Assembly on the presidency's 2013/14 budget on Wednesday, Zuma warned about South Africa's labour relations situation.
"It is not in the interest of the country to have a tense labour relations environment, which is characterised by a weakening of collective bargaining mechanisms, illegal wildcat strikes, violent protests and loss of life," he said.
Zuma said he was optimistic a solution would be found.
"The presidency will this year take a hands-on approach, working closely with relevant departments and social partners to boost confidence in the economy."
What was required was a "commitment to resolve labour disputes peacefully and within the framework of the law, and in the interests of workers, employers and the country as a whole".
The president said he had recently asked Deputy President Kgalema Motlanthe to lead a ministerial team to help the mining sector normalise the situation.
Mthembu said the ANC also welcomed Zuma's call for partnerships to deal with youth unemployment.
"... [That] the successes of the ANC government are many, as outlined in the presidency's budget vote, is undisputed," he said.
"We are confident and we proclaim with no fear of contradiction that South Africa is on the right track with government continuing to deliver on the aspiration and mandate of the people."
Source : Sapa /aa/rod/clh
Date : 12 Jun 2013 19:38
The ANC has welcomed President Jacob Zuma's remarks that the presidency will work to boost confidence in the economy.
"The ANC welcomes the commitment made by the presidency to strengthen confidence in the economy, particularly seeking to intervene to halt the instability in the mining sector," African National Congress spokesman Jackson Mthembu said in a statement on Wednesday.
"The ANC has noted the challenges that still remain, particularly in relation to our advance for socio-economic freedom," he said.
Opening debate in the National Assembly on the presidency's 2013/14 budget on Wednesday, Zuma warned about South Africa's labour relations situation.
"It is not in the interest of the country to have a tense labour relations environment, which is characterised by a weakening of collective bargaining mechanisms, illegal wildcat strikes, violent protests and loss of life," he said.
Zuma said he was optimistic a solution would be found.
"The presidency will this year take a hands-on approach, working closely with relevant departments and social partners to boost confidence in the economy."
What was required was a "commitment to resolve labour disputes peacefully and within the framework of the law, and in the interests of workers, employers and the country as a whole".
The president said he had recently asked Deputy President Kgalema Motlanthe to lead a ministerial team to help the mining sector normalise the situation.
Mthembu said the ANC also welcomed Zuma's call for partnerships to deal with youth unemployment.
"... [That] the successes of the ANC government are many, as outlined in the presidency's budget vote, is undisputed," he said.
"We are confident and we proclaim with no fear of contradiction that South Africa is on the right track with government continuing to deliver on the aspiration and mandate of the people."
Source : Sapa /aa/rod/clh
Date : 12 Jun 2013 19:38
LazyLion
King of de Jungle
- Joined
- Mar 17, 2005
- Messages
- 105,603
Trade Conditions Decline: SACCI
Trade conditions did not improve in May but remained within positive territory, the SA Chamber of Commerce and Industry (Sacci) said on Thursday.
Sacci's Trade Activity Index (TAI) declined by five points between April and May 2013 to reach 56.
This followed a surge of five points between March and April 2013.
Sacci CEO Neren Rau said the trade sector appeared to be doing better than the broader economy.
Rau said trade conditions could be further hampered by tighter retail trade conditions and exports being under pressure.
"The decline... confirms the volatility in trade conditions under the present uncertain economic circumstances," he said.
The seasonally adjusted TAI dipped by eight points to 57 in May after improving by 11 index points in April 2013.
With economic growth declining to below two percent year-on-year, trade conditions were likely to come under strain for the rest of 2013.
Sales volumes and new orders also reversed their gains of 10 and eight index points in April 2013.
Supplier deliveries and backlogs on orders, however, slowed slightly in May 2013 with inventory levels increasing due to slowing sales volumes.
The pressure on sales prices remained high but stable with the index at 62 in April and May 2013.
The sales price index was three points above the 59 it reached in May 2012.
The input prices index was at 71 and exceeded the sales prices index by nine points in May 2013, indicating relatively high input cost pressures.
Trade prospects (TEI) for the six months hence remained positive, with the TEI on 61 in May 2013 compared to 64 in April 2013.
The seasonally adjusted TEI averaged at 62 for the first five months up to May 2013 and was the same average as for the first five months of 2012.
The outlook for input and sales prices eased as the indices decreased in May 2013 by four and five index points respectively, after reaching high levels of 73 and 83 in April 2013.
Employment conditions in the trade environment weakened in May 2013 with the index declining by three points to 49.
The index on six-month employment prospects also dipped by three points from the previous month to 51 in May 2013.
Source : Sapa /pd/hdw/ad/th
Date : 13 Jun 2013 12:03
Trade conditions did not improve in May but remained within positive territory, the SA Chamber of Commerce and Industry (Sacci) said on Thursday.
Sacci's Trade Activity Index (TAI) declined by five points between April and May 2013 to reach 56.
This followed a surge of five points between March and April 2013.
Sacci CEO Neren Rau said the trade sector appeared to be doing better than the broader economy.
Rau said trade conditions could be further hampered by tighter retail trade conditions and exports being under pressure.
"The decline... confirms the volatility in trade conditions under the present uncertain economic circumstances," he said.
The seasonally adjusted TAI dipped by eight points to 57 in May after improving by 11 index points in April 2013.
With economic growth declining to below two percent year-on-year, trade conditions were likely to come under strain for the rest of 2013.
Sales volumes and new orders also reversed their gains of 10 and eight index points in April 2013.
Supplier deliveries and backlogs on orders, however, slowed slightly in May 2013 with inventory levels increasing due to slowing sales volumes.
The pressure on sales prices remained high but stable with the index at 62 in April and May 2013.
The sales price index was three points above the 59 it reached in May 2012.
The input prices index was at 71 and exceeded the sales prices index by nine points in May 2013, indicating relatively high input cost pressures.
Trade prospects (TEI) for the six months hence remained positive, with the TEI on 61 in May 2013 compared to 64 in April 2013.
The seasonally adjusted TEI averaged at 62 for the first five months up to May 2013 and was the same average as for the first five months of 2012.
The outlook for input and sales prices eased as the indices decreased in May 2013 by four and five index points respectively, after reaching high levels of 73 and 83 in April 2013.
Employment conditions in the trade environment weakened in May 2013 with the index declining by three points to 49.
The index on six-month employment prospects also dipped by three points from the previous month to 51 in May 2013.
Source : Sapa /pd/hdw/ad/th
Date : 13 Jun 2013 12:03
What is driving the weakness of the South African rand?
http://www.moneyweb.co.za/moneyweb-soapbox/what-is-driving-the-weakness-of-the-south-african-
http://www.moneyweb.co.za/moneyweb-soapbox/what-is-driving-the-weakness-of-the-south-african-
Last edited:
Would you invest in a country:
a) if there was no clear plan on what they were planning for the future?
b) where every second government employee is either on trial for and or under suspicion/investigation of, committing fraud and or corruption?
Yes, there are some major factors in the international markets contributing to the weakening of the Rand but we also need to admit that the current local situation is a very large contributing factor.
a) if there was no clear plan on what they were planning for the future?
b) where every second government employee is either on trial for and or under suspicion/investigation of, committing fraud and or corruption?
Yes, there are some major factors in the international markets contributing to the weakening of the Rand but we also need to admit that the current local situation is a very large contributing factor.
Why Zuma? It is the Western Cape that is getting the business.
What does this have to do with Zuma?
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