The ZAR Exchange Rate Thread

[etienne_marais]

That's the thing they keep telling me, but damn a good exchange like getting as close to the dollar as possible seems so nice?

Then I can go overseas, buy stuff etc?

No boffin myself, but I understand a weak rand is good for exports and thus industry and hence employment.

 

[saturnz]

That's the thing they keep telling me, but damn a good exchange like getting as close to the dollar as possible seems so nice?

Then I can go overseas, buy stuff etc?

yeah and the effect of that is money flowing out of the country, weakening the exchange rate

 

[Thor]

Makes sense cheaper for US to buy from us.

But we export our minerals they manufacture it then we buy it back for expensive prices that can't be good?

 

[Thor]

yeah and the effect of that is money flowing out of the country, weakening the exchange rate

Urgh... This sucks. I give up

 

[saturnz]

Makes sense cheaper for US to buy from us.

But we export our minerals they manufacture it then we buy it back for expensive prices that can't be good?

which is why beneficiation has been very topical recently, especially with respect to platinum, unfortunately mines just extract minerals and can't be expected to refine them.

manufacturers have to come to the party, but then things become political and clouded, its a sad story. If we produced all the catalytic converters in the world we would be a very rich country, given that we supply 80% of the world market with PGMs. I actually wrote a paper on this topic about 4 years ago.

 

[Thor]

which is why beneficiation has been very topical recently, especially with respect to platinum, unfortunately mines just extract minerals and can't be expected to refine them.

manufacturers have to come to the party, but then things become political and clouded, its a sad story. If we produced all the catalytic converters in the world we would be a very rich country, given that we supply 80% of the world market with PGMs. I actually wrote a paper on this topic about 4 years ago.

Stuff like this makes me sad.

 

[Swa]

a strong exchange rate is not necessarily a good thing, which is why China has for years tried to artificially weaken its currency against the US

China is a big exporter. When it comes to SA a weak rand is primarily good for farmers but when it comes time to replace equipment they're going to complain about it again. We barely produce anything else of note so a weak currency is overall a bad thing for most of us.

 

[etienne_marais]

Makes sense cheaper for US to buy from us.

But we export our minerals they manufacture it then we buy it back for expensive prices that can't be good?

Erm, to be honest, South Africa has seen very little of its own tremendous wealth. The mining corporations were historically owned by Anglo, American and Anglo-American companies. Many of these companies were listed on the FTSE first and then on the JSE. Effectively S.A.'s wealth was channeled out of the country while these companies DID invest in infrastructure, created employment, invested in arts and culture and charity in South Africa, it was effectively a spit in the bucket. So I agree with you, we exported minerals and bought back the end products. The reality is also that historically we were not capable of operating the mines ourselves and did not have the refinement and production abilities.

 

[saturnz]

China is a big exporter. When it comes to SA a weak rand is primarily good for farmers but when it comes time to replace equipment they're going to complain about it again. We barely produce anything else of note so a weak currency is overall a bad thing for most of us.

what you say cannot be backed up with actual evidence, especially when you look at our top 10 exports

 

[etienne_marais]

China is a big exporter. When it comes to SA a weak rand is primarily good for farmers but when it comes time to replace equipment they're going to complain about it again. We barely produce anything else of note so a weak currency is overall a bad thing for most of us.

Farmers ? In 2007 we became a net importer of food as opposed to a net exporter. A weak rand benefits industry and employment of the lower income classes.

 

[Swa]

what you say cannot be backed up with actual evidence, especially when you look at our top 10 exports

What are our top 10 exports? Everything I buy that isn't food or clothing is imported. Then most of the clothing items are also imported though heavily taxed. There isn't a convincing backed up argument that a weak rand is overall a good thing.

 

[etienne_marais]

What are our top 10 exports? Everything I buy that isn't food or clothing is imported. Then most of the clothing items are also imported though heavily taxed. There isn't a convincing backed up argument that a weak rand is overall a good thing.

That depends on your social, political and socio-political views. I happen to agree that I want a strong currency but that is incompatible with the true colours of the N.S.A.

 

[saturnz]

What are our top 10 exports? Everything I buy that isn't food or clothing is imported. Then most of the clothing items are also imported though heavily taxed. There isn't a convincing backed up argument that a weak rand is overall a good thing.

http://www.sars.gov.za/AllDocs/Docu...rchandise Trade Statistics - October 2014.pdf

I'm sure you will be able to work out from that whats our top exports, and food items is not high, but rather minerals and precious metals.

Everything you do consume is effectively imported, I agree, but with time things will change, thats how elasticity works. If producers have an incentive to produce they will, at the moment that incentive is not there. I think they are assembling flat screen TVs in Atlantis, thats a start? The samsung monitor I am using has a made in SA stamp at the back as well.

 

[Midnight_choir_drunk]

Makes sense cheaper for US to buy from us.

But we export our minerals they manufacture it then we buy it back for expensive prices that can't be good?

Yes, but the cost of buying in stuff provides a very good incentive for people to start producing it here instead. This means jobs and keeping the money in the country. A weak rand is the best possible thing for the country right now. We are too reliant on imports.

In fact now with the petrol price set to come down another Rand per liter, despite the weak Rand, things are looking really rosy.

 

[Thor]

Yes, but the cost of buying in stuff provides a very good incentive for people to start producing it here instead. This means jobs and keeping the money in the country. A weak rand is the best possible thing for the country right now. We are too reliant on imports.

That's how I feel.

 

[Midnight_choir_drunk]

That's how I feel.

Not to mention it makes South Africa a really cheap destination to travel to right now, which boosts tourism and again is good for the economy.

A strong Rand seriously hurts our competitiveness. Only an idiot would want that.

 

[The_Assimilator]

Everything you do consume is effectively imported, I agree, but with time things will change, thats how elasticity works. If producers have an incentive to produce they will, at the moment that incentive is not there. I think they are assembling flat screen TVs in Atlantis, thats a start? The samsung monitor I am using has a made in SA stamp at the back as well.

Except I don't want to buy things manufactured in SA because the quality is appalling. The worst Chinese junk is better made than the "best quality" SA goods, and far cheaper, even when you take shipping into account. SA is never, ever going to be able to compete with China due to our government's idiotic labour laws and our workforce that is mostly unskilled and unmotivated.

 

[The_Ogre]

And the mines, that surely impacted the ZAR badly.

(I'm still confused as to what determines fluctuations in the Rand)

Thanks for making me a little bit more wise.

But yea I figured this isn't something I will fathom any time soon it seems.

I would love to see that good ol sub R10 a dollar again.

Its not that difficult to understand.

Have a look here. However, before you start interpreting that, first change to our timezone else it will be confusing as hell

Click on "Current Time" - its easier to just ctrl+f to find it - and change the time to GMT +2.

You'll notice at 1130 two announcements are expected from South Africa by global investors.

First is the Profuction Price Index (PPI) Year on Year for the year ending November.
Second is the Production Price Index Month on Month for the month of November.

If the PPI (YoY) is higher than 6.4% than its good for our currency -> USD/ZAR will decrease slightly
If the PPI (MoM) is higher than 0.1% than its good for our currency. -> USD/ZAR will decrease slightly

However, these two announcements do not carry that much weight (you'll notice each only has one "bull" next to it indicating that its low in importance, so it will only have a slight impact on USD/ZAR)

Next focus your attention on 1530, if these announcements are better than the forecast values then USD/ZAR will rise.

So as you can see, it doesn't always mean that we've messed up which causes the rand to fall in value. Sometimes it is because the US has better performed in certain sectors, etc.

Use this chart to check the price movements of the currency pair.

 

[Midnight_choir_drunk]

Except I don't want to buy things manufactured in SA because the quality is appalling. The worst Chinese junk is better made than the "best quality" SA goods, and far cheaper, even when you take shipping into account. SA is never, ever going to be able to compete with China due to our government's idiotic labour laws and our workforce that is mostly unskilled and unmotivated.

If you don't support local manufacturers, you're only spiting and hurting opportunities for yourself. Australia remains competitive because they have something called national pride. The Buy Australian campaign did wonders for their economy. We tried to implement it here with the "proudly South African" campaign, but South Africans are extremely self loathing people and it never took off.

And South Africa manufacturers loads of very competitive and quality products. Look at the motor industry here for example.

There nothing to admire about the Chinese work ethic. Cold discipline and abusive "hive mind" propaganda has whipped the humanity out them. People are frankly better off dead with that quality of life. They're hardly sentient and self aware. There is a line we have to draw between being successful at all costs and maybe allowing some space to people to enjoy their lives.

 

[Solitude]

That's very interesting YingYang. Thanks for sharing.