The ZAR Exchange Rate Thread

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Aqua_lung said:
Aaand we've broken through R15 to the $!
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So Cyril' s sweet-talking is having little effect. This is good. International pressure against an economically illiterate policy is good.


Land reform emerges as latest pressure point for battered rand

The emerging-market sell-off may have already battered South Africa’s rand, but it could get worse as traders fret about a push for land reform that may have far-reaching economic consequences and is catching the attention of world leaders.

The currency plunged almost 10% against the dollar in August, its worst month in more than five years. Derivatives markets are signaling more pain to come as the economy teeters on the brink of recession and contagion from crises in Argentina and Turkey spreads. Traders are also increasingly nervous about the ANC’s plans for a constitutional amendment around expropriation of land without compensation.

Most investors agree land redistribution is crucial to address lingering inequalities between white South Africans -- who own 72% of commercial agricultural land, according to a state audit - and black citizens, almost 25 years after the end of apartheid. But they’re concerned about a lack of details and say it could undermine property rights, deter foreign investment and lead to penalties from other countries, according to Morgan Stanley and Standard Chartered.

“Land reform is emerging as one of the key issues and it’s clear markets remain nervous,” said Razia Khan, London-based head of African research at Standard Chartered.

Reflecting investors’ angst, the currency suddenly rallied on August 28 after lawmakers announced they were withdrawing a bill on land expropriation. The surge ended barely 10 minutes later once traders realised it was a procedural move and that the constitutional change was being dealt with separately.

“This type of reaction might well become commonplace ahead of the 2019 general elections,” said Nema Ramkhelawan-Bhana, the head of research at Rand Merchant Bank in Johannesburg.

Morgan Stanley said land reform was “brought up at just about every meeting” they had with US investors earlier this year, with the “overwhelming majority” believing the proposal could hurt South African markets. Deutsche Bank AG cited “risks around negative headline news” to do with the land negotiations as one reason to short the rand on August 30.

Currency traders are bearish. The premium of options contracts to sell the rand over those to buy it in the next three months, known as the 25 Delta risk reversal, soared last week to 5.25 percentage points, the highest in almost three years and the second-highest level in the world after Turkey’s lira. The currency dropped 0.9% to 14.8233 per dollar on Monday.
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Chris_the_Brit said:
So Cyril' s sweet-talking is having little effect. This is good. International pressure against an economically illiterate policy is good.


Land reform emerges as latest pressure point for battered rand
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Funny you highlight an issue which is probably contributing the least to the ZAR weakness. The land issue has been on the table since December and ramped up weeks ago without such an effect on the currency. If that were the case it's have been in free fall since the ANC voted with the EFF on the motion to change the constitution but I suppose whatever support your prejudices.
 
1 United States Dollar equals
15,22 South African Rand

So what any business owner already knew: recession is real and the Rand shall bleed
 
*flush*

I finished moving all my cash to pounds and dollars a few months back, my day to day stuff sits in btc:ROFL:
 
R13... said:
Funny you highlight an issue which is probably contributing the least to the ZAR weakness. The land issue has been on the table since December and ramped up weeks ago without such an effect on the currency. If that were the case it's have been in free fall since the ANC voted with the EFF on the motion to change the constitution but I suppose whatever support your prejudices.
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Not really. Investors were taking a "wait and see approach" during the land hearings, then Cyril makes a late night announcement a few weeks back. Now international investors are really paying attention, helped by Afriforum, Donald Trump;s tweet and the Institute for Race Relations (which gave a speech to the Cato Institute in Washington DC) going on international tours raising awareness of the issue.
 
Temujin said:
*flush*

I finished moving all my cash to pounds and dollars a few months back, my day to day stuff sits in btc:ROFL:
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Just be careful - when you become non resident for tax purposes, you will pay a huge amount of capital gains tax due to currency gains.
 
Chris_the_Brit said:
Not really.
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Pardon me, you don't have a mandate to speak my mind, you dont have my vote. You shall bend, not my spoon.

JayM said:
Just be careful - when you become non resident for tax purposes, you will pay a huge amount of capital gains tax due to currency gains.
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how? when you send your money ,you send everything.
 
chicken247 said:
Pardon me, you don't have a mandate to speak my mind, you dont have my vote. You shall bend, not my spoon.



how? when you send your money ,you send everything.
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I suppose if you decide to leave and never return, and have no ties to or family in SA then you can skip doing your final tax return.
 
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