The ZAR Exchange Rate Thread

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I remember how I was watching the ZAR - USD exchange when I was shopping for a 3D printer a few years ago (i think 3?). Man I was grumpy when it hit 13.30... Man those were the days :(
 
Gtx Gaming said:
2.3Trillion dollars created out of thin air!
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Disclaimer: this is not my field of expertise whatsoever, but I do find it interesting.

Does this mean they are "printing" money? If yes, doesn't that devalue a currency quite a bit? Isnt that good for us?
 
jouda said:
I remember how I was watching the ZAR - USD exchange when I was shopping for a 3D printer a few years ago (i think 3?). Man I was grumpy when it hit 13.30... Man those were the days :(
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It was R12 just 2 years ago.

Wait until the covid-19 pandemic ends. Rand will eventually stabilise.
 
jouda said:
Disclaimer: this is not my field of expertise whatsoever, but I do find it interesting.

Does this mean they are "printing" money? If yes, doesn't that devalue a currency quite a bit? Isnt that good for us?
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Yes it should, but the US dollar never really devalue as it is reserve currency of the world and oil has to be settled in dollars. There is just always a demand for dollars.
 
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genetic said:
It was R12 just 2 years ago.

Wait until the covid-19 pandemic ends. Rand will eventually stabilise.
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I know they mention on they Money show on 702 (or used to) that our currency is undervalued. How does one go about getting this fixed though? Just through decent policy decisions? Surely a rubbish currency hurts everyone that imports anything (and we are heavy importers in SA)
 
But exporters will be rubbing their hands gleefully... there's always a winner somewhere in everything.
 
jouda said:
I know they mention on they Money show on 702 (or used to) that our currency is undervalued. How does one go about getting this fixed though? Just through decent policy decisions? Surely a rubbish currency hurts everyone that imports anything (and we are heavy importers in SA)
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Certainty more than policy. You can have a reasonably stupid policy as long as you are consistent in its implementation and the message around it. Investors will find a way to work with you.

In our case the permanent double speak and policy uncertainty kills us.

Take the mining charter for example, when it was first introduced you needed to do X. Then it became 2X+Y, the industry went up in arms and it got scaled down to X+Y while the most of them had already found a way to do X well and keep investors happy. The extra Y broke the existing model and guys start pulling out because it just isn't viable and who's to say it doesn't change again in 5 years.

As long as you have 1 concrete policy you stick to people will invest. As soon as you have uncertainty you're ****ed.
 
jouda said:
Disclaimer: this is not my field of expertise whatsoever, but I do find it interesting.

Does this mean they are "printing" money? If yes, doesn't that devalue a currency quite a bit? Isnt that good for us?
Click to expand...
Yes and no. They're printing, but it doesn't go to actual people they buy junk bonds, mostly held by financial institutions to ensure liquidity. It's just bailing out banks over and over again. There's no real benefit and the money doesn't really enter the economy to cause inflation.
 
rietrot said:
Yes and no. They're printing, but it doesn't go to actual people they buy junk bonds, mostly held by financial institutions to ensure liquidity. It's just bailing out banks over and over again. There's no real benefit and the money doesn't really enter the economy to cause inflation.
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Like buying bad debt, they probably end up writing it off with tax payer money right?
 
jouda said:
I know they mention on they Money show on 702 (or used to) that our currency is undervalued. How does one go about getting this fixed though? Just through decent policy decisions? Surely a rubbish currency hurts everyone that imports anything (and we are heavy importers in SA)
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Also not an accountant or economist, but this may explain things a bit ....

Sometimes, you dont want to fix an undervalued currency.

Generally, floating currencies depend on demand for that currency. So, the more people want a currency, the stronger it is.
The dollar is good hedge currency - people use it to trade with a standard currency and convert their capital to dollars maybe because of volatility - the swings in demand for their currency and the relative exchange rate against another currency.

Now, the the thing is, if our Rand is strong - relative to other currencies - it makes things expensive to buy from SA.
For example if you buy a widget that costs a Rand to make, and the rate of exchange is 1:1, that item cost you $1. If the rate is 10:1, you are getting the widget for $0,10c - because it cost a Rand to make.
So given a choice, people would by our stuff - its cheaper.

Governments can also influence demand for Rands, and so manipulate their rates by gross buying or selling off of their currency, but that usually is keep the currency in a band, because volatility is more risky - people like certainty - they like to know that the item on Amazon at $1, or ZAR10, is still in that ball park, and hasnt gotten more expensive.

Sentiment, exchange rates, future potential for growth, stability - a whole host of factors go into how a currency may perform left to its own devices, without meddling with interest rates, currency buying and the like.

Then you have China, who say they have floated their currency, but oddly its fluctuations mirror the US$ because its pitted against the $ - the US being their biggest market for goods, and of course Donald Trumps war cry and anti Sino Sentiment. This has helped China in as much as the Yuan : US$ was pegged at around 8:1 since the early 90s, and trading certainty has allowed for easy trade - you know what you are going to pay for an item out of China, and usually its cheap due in part to Government exports subsidies.
 
Thanks for a great reply around the Rand. And yes the Rand is now indeed trading stronger than R18. It was intersting how people were quoting a web page that put the Rand at R24/$ in a few months time. Also they forecast the level for the next 3 years. Within 8 hours their 3 year model suddenly shows no sign of the R24 level.

The Rand was steady between R14 and R15.30 and only Corona caused people to move away from weak currencies to the stronger $. Things will look better in months to come.
rand-2020.jpg
 
:Personally, I hoping that ass falls out of the US$ short term, relative to the Rand.
I need to convert some Randellas to Dollars to buy a house.
 
ekkekan said:
Thanks for a great reply around the Rand. And yes the Rand is now indeed trading stronger than R18. It was intersting how people were quoting a web page that put the Rand at R24/$ in a few months time. Also they forecast the level for the next 3 years. Within 8 hours their 3 year model suddenly shows no sign of the R24 level.

The Rand was steady between R14 and R15.30 and only Corona caused people to move away from weak currencies to the stronger $. Things will look better in months to come.
View attachment 816757
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Some of the predictions were really just thumb sucks, but we do still have the two downgrades to confront and that is not going to be easy in the months to come with current trade very limited. Long term, the Rand will likely continue to lose value.
 
ekkekan said:
Thanks for a great reply around the Rand. And yes the Rand is now indeed trading stronger than R18. It was intersting how people were quoting a web page that put the Rand at R24/$ in a few months time. Also they forecast the level for the next 3 years. Within 8 hours their 3 year model suddenly shows no sign of the R24 level.

The Rand was steady between R14 and R15.30 and only Corona caused people to move away from weak currencies to the stronger $. Things will look better in months to come.
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I think also consider that this is a ratio of ZAR to US$.
One needs to consider the factors that may affect the ZAR, be it negative or positive, factors that affect the US$ and global factors.

While SA has to contend with downgrades and the aftermath of the lock down, so the US has to contend with the economic slow down, and they have an election coming up. Both can influence each country quite dramatically.

Having said that, there is just more negative sentiment toward the Rand than the US$ - those downgrades came for a reason, and never came suddenly ;)
 
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