Advertise Here


IconAdministration Outsourcing
IconAsset Managers
IconAssociations & Institutes
IconBBBEE Consulting and Verification Agencies
IconBusiness Chambers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDebit Order Collection Facilities
IconEducation and Training
IconHuman Resources
IconInformation Technology and Software Partners
IconInvestment Consulting
IconInvestment Fund Managers
IconListed Equities
IconParticipation Bond Managers
IconPolicy Administration
IconPolicy Trading
IconProperty Unit Trusts (PUTS)
IconRegulatory Authorities
IconStock Exchange
IconSurveys and Research
IconTraining Courses & Workshops
IconUnit Trust Fund Managers
IconWellness Programs
Advertise Here
  Subscribe To »

Rand plummet "due to external factors"






Currency manipulators are said to be worsening the volatility of the Rand

The dramatic plummet of the Rand to the US Dollar is due to external factors and has nothing to do with the country’s domestic economic indicators, economists say. 

Professors Bonke Dumisa from the University of KwaZulu-Natal and Raymond Parsons from the North West University School of Business and Governance both agreed on Monday that external factors were behind Monday morning’s Rand mettle-down, which saw the currency reach over R15 to the dollar – for the first time in two years. 

Dumisa said the market manipulators were behind the fall of the Rand and other emerging markets across the globe. 

“It started with the US imposing 20% tariffs on the Turkish Lira, dropping immediately and a run on the Turkish Lira, which is threatening the banking system in the country,” he said. 

The situation was exacerbated by currency manipulators who decided to make a kill on the emerging markets currencies. 

“It has very little to do with the South African domestic economic indicators. 

“Many of us would have loved to see the petrol price go down in September because the rand was showing signs of significantly improving. The petrol price today is at $72, as opposed to $80 in July. But as it is now, if the situation with the Rand does not improve and goes back to what it was over the past two weeks (R13.20), then I’m afraid we might see petrol prices going up again in September. 

“But I don’t want to call it just yet because this thing might just fade.” 

The manipulators, Dumisa said, wanted to “make a killing as quickly as possible”. 

“So it’s all a matter of being opportunistic.” 

Despite being optimistic, Dumisa warned that if the situation persisted at these levels, it would spell doom for the country’s inflationary outlook. 

“I don’t think it will be a long-term thing, otherwise the consequences will be very dire for the South African economy.” 

Parsons concurred, pointing out that global markets were currently going through a bad risk-aversion phase, mainly as a result of the economic crisis in Turkey. 

“Investors are nervous chiefly because of concerns about Turkey, which are dragging down other emerging market currencies like the Rand,” he said. 

As Dumisa pointed out, another factor was that of the rising US interest rates. 

Parsons said this makes investment in the US seem more attractive and drains funds from emerging markets.

He said the prospect of trade wars between the US and China is also presently not good news for emerging markets.

“Even if the Rand recovers in the short-term, the international economic environment at the moment still presents a worrying outlook. 

“Of course, exporters gain from a cheaper Rand but imports will cost more. The most important domestic risk would be further rises in fuel costs and the petrol price. We have already seen what earlier trends in the global oil price, a weak rand and fuel levies have done to motoring costs.”

To avoid vulnerability to external shocks and Rand volatility, South Africa needs to make its economy less dependent on short-term capital inflows, Parsons said. 

“Global capital flows of this kind often reflect sudden shifts in global sentiment and are easily reversed, as we now are again experiencing. Not for nothing are such capital flows often described as 'hot money'. As a highly liquid currency, the Rand then responds, depending whether such investors want to increase or decrease their exposure to emerging markets like SA. Domestic factors then also come into play in their decision-making,” said Parsons. 

The country, he said, needed to do more to attract long-term capital investment in physical or commercial development and business needed to be encouraged to take a long-term view of South Africa’s economic potential. 

« Back to previous page Print this page » |

Breaking News »

What is the difference between Black Friday and Cyber Monday?

Cyber Monday originated in the US and is a marketing term used for the Monday after Thanksgiving. It was created by retailers to encourage people to shop online. The term was coined by Ellen ...
Read More »


Interview with Bright Rock CEO, Schalk Malan about their ground-breaking temporary disability cover

In October 2019 Needs-matched life insurance provider, BrightRock, announced enhancements to their temporary expenses cover. Read More More recently Insurancegateway® Interviewed Schalk Malan to not only ...
Read More »


The Importance of an effective online campaign

As we enter the age of the fourth industrial revolution, a technological transformation driven by the internet, it seems almost unthinkable that the web would not be the preferred platform chosen by businesses ...
Read More »


Tomorrow’s retirement industry will be radically different – So what should pension funds be thinking about now?

By Petri Greeff, Head of Investment Advisory at RisCura Pension funds today should be investing for a horizon of 80 years or more. While it’s impossible to predict what the world will be like in 2100, ...
Read More »


More News »


Healthcare »


Life »


Retirement »


Short-term »

Advertise Here
Advertise Here

From The Glossary »


Captive Insurance Company:

An insurance company owned by a parent company or a group of companies and writing its owner’s insurance. Captive insurers are formed where insurance is not obtainable from the conventional market or where a company wishes to put its insurance program into a tax effective vehicle which improves the overall profitability of the group.
More Definitions »






Contact IG


Media Pack


RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2019. All Rights Reserved.