The tumultuous Rand

[Bronwyn&Co]

I don't think the strikes are ever going to be over. As one strike is finishing, another one is always starting in another sector. These people just don't understand that investors are wanting nothing to do with their dramas and this is all going to play out very badly. When SA experienced disinvestment in the 80's the country was robust enough to keep self-supplying. Nowadays, not so much. The infrastructure needs work, the farmers need help, and local production is down because everybody wants to toyitoyi. I honestly cannot see a way out of this, not with Zuma heading in for another clueless term of spending the little taxes they collect from the final few taxpayers who haven't already buggered off overseas or claimed everything as a business expense.

[chzaau]

They had a head of something from Standard Bank on the radio 702 they other evening discussing the economy etc and basically the situation he described was this.

Although SA get inflows of FDI, it not the FDI that is being invested in productive capacity but just being pushed onto the stock market and quick high return things. The consumer is very weak, their disposable income is being eaten up in by electricity increase, fuel price increases, ETOLL etc and soon expected interest rate increases. So who is going to drive the economy was the question and it does not look good.

Then we have QE in the US being wound back, the quick money (hot money) described earlier is going to dry up and in return inflows will turn to outflows fast, at a time when the current account deficit is not looking good. That will trigger the rand to blow out and in return our stock market will also fall as that cash is pulled out and returned.

The only way the country can get out of it position now is to attract investment to build productive assets that will in turn create employment and start driving the economy again.

The government needs to get a grip on it income to spending, because if it does not get a grip the country will be broke. I think of big concern will be this 1 trillion they plan to spend on the ndp, right now it is not clear where they going to get this 1 trillion from.

We need power, we have no power so anything big that investors might want to invest in, well sorry no juice to run it.

Expect a major pain in the platinum belt with job losses coming and that will feed through. One just has to look at Continental tyres strike that end up costing 120 jobs through union sillyness.

My view next likely target would be to increase taxes, they would for instance do an income tax increase on the wealth but that not going to fill the hole, so they will also increase taxes on fuel and possible a VAT increase.

[Bronwyn&Co]

I agree Chzaau.

But increasing taxes is like putting a band-aid on an amputated arm at this point. People just cannot afford any more and politicians aren't grasping that they are spending money in all the wrong places.

I was pinning my hopes on the election and the hope that Zuma might stand down in favour of someone with half an idea of how to run a country.

If something doesn't change soon, we are headed for a Zim situation, and look how fast that all happened.

[SurferMan]

Here is my 50 cents. Strikes are getting worse, more violent and more frequent. Cold Fact. next up are cars, food and other primary industries emboldened by AMCU's successes. The Rand has declined steadily (yes with blips up and down along the way) steadily. There is only one good time to transfer money, and that was yesterday! Since 2010, its dropped from 6ZAR/1AUD to today, 10ZAR/1AUD, thats an average of R1 per annum. Straight line and in 5 years it will be 15/1...In 2005/6 it was around 5/6ZAR/1AUD....watch the long term trend.

SA is already like Zim, but with a far better veneer and highly efficient tax machine. Look at the current account and capital inflows. Look at the borrowing rate and the public sector wage bill. Who's to say they wont strike for R12, 500...It's crazy but there is blood in the water and the unions realise that radicalisation by newer unions are chewing into their support base and their comfy relationship with capitalists. (Remember the mines pay the union bosses AND the union pays the union bosses...no conflict of interest there hey?)

Now,stand back a moment and take a look at the big picture. Where is SA being herded? Yes, that's right, the 2nd Revolution, straight out of the Marx manifesto, down to the language being used. Nationalisation of industries, land, farms and key industries are happening in front of your eyes. What does that have to do with currency cashout/conversion? Everything, Your investments are being engineered to only be of value in Africa, just like your education. Your degree(s) is/are useful only in SA, nowhere else. Very smart if you ask me. Ensures the geese cannot fly the coop so easily as with previous generations. Dumbing down the nation to ensure achievers are brought to heel. In the big scheme of things, I would cash out as soon as I can, and not wait for a small blip that even on a million bucks will mean a few grand once converted. Better to have AUD at 10/1 than AUD at 12/1 or worse....

Edited June 5, 2014 by SurferMan

[chzaau]

There she blows... the begining of the end ... it's going to be exteremely difficult to get things going and most likely take South Africa a decade to recover from this mess if at all, but I expect what will happen is they will just go after anything they can get their hands on.

http://www.fin24.com/Economy/Top-economist-bets-SA-already-in-recession-20140605

It really is starting to look like SA is following the same manual from Zim... source http://en.wikipedia.org/wiki/Economic_history_of_Zimbabwe

(Selective items taken from the article)

The government propagated a whole range of new economic policies, introducing a minimum wage and virtually eliminating the right to fire workers.^[3] Total spending on education nearly tripled (from Z$227.6 million to Z$628.0 million), as did government spending on healthcare (from Z$66.4 million to Z$188.6 million), between 1979 and 1990.^[2] Expenditure on public-sector employment rose by 60%, and on the civil service by 12% per annum over the course of the 1980s. Central government expenditure tripled and increased its share from 32.5 percent of GDP in 1979 to 44.6% in 1989. Interest rates were artificially capped

Public spending skyrocketed, particularly in the areas of civil service employment, spending on social services, drought relief, and subsidies for government owned companies.^[2] This in turn generated a chronic budget deficit, a high tax regime, and a rapid increase in public debt – all of which created a drag on the economy.^[

By 1990 there were increasing demands for greater native African participation in ownership of the economy on the basis of continuing racial inequalities in the post-colonial economy.

And then we all know what happened.

[Eyebrow]

On xe.com the AUD:ZAR exchange rate has breached the R10 mark.

I cant believe this!

Grrrrrr.

I am losing money every day!

By the time we get to go thousands will be lost.

When I started this process, one dollar was R8.90...

[Bronwyn&Co]

I just had a conversation with my DH who heard & believes that the Rand will improve by 10% after the Lonmin strike is wrapped up, but I don't agree with him. It is our perennial argument

Edited June 13, 2014 by Bronwyn&Co

[goFly]

On xe.com the AUD:ZAR exchange rate has breached the R10 mark.

I cant believe this!

Grrrrrr.

I am losing money every day!

By the time we get to go thousands will be lost.

When I started this process, one dollar was R8.90...

It was R6.70 when I first applied almost 6 years ago......

[Renny]

Any one with more wise words? We also kind of ready to transfer but not a good rate at the moment. Our previous exchange was at R9,65

[SurferMan]

Here is the best advice....the Rand keeps diving, yes it blips all the time, but be smart and look from 2001, or even better, 1994....It is NOT going up. Cash in and be happy. :jester:

[Heymanse]

Any one with more wise words? We also kind of ready to transfer but not a good rate at the moment. Our previous exchange was at R9,65

Get your money out asap. Rand hit the R10.15 mark yesterday and that's not even the bank's rates.

[Bronwyn&Co]

Any one with more wise words? We also kind of ready to transfer but not a good rate at the moment. Our previous exchange was at R9,65

I wish I had some wise words Long term I don't see an improvement.

[chzaau]

I don't think the double downgrades on Friday are going to be a good thing.

[Donovan83]

It was about R8.50:$1 when I got here. I remember having the same debate (thinking it might improve back to R6 or R7)... gut feel and logic said that in the absence of evidence to the contrary, what was true in the past will be true in the future. The country has seen a constant slide in the value of its currency since 1994. Why would this be different going forward? The reasons for the decline are actually getting WORSE, so it is a really good idea to get out now. Even though in 6 months you may be kicking yourself if it goes back to R9, in 5 years it will likely be R20+ or more. Just bite the bullet.

[SurferMan]

I agree, take your money and run. There is no one person who can argue that the Rand is tanking gradually. Just look at the comments by all the forumites on here. The exchange rate keeps diving. Waiting for a dip/blip that may never come is not clever risk management. I paid 6.8 when I left, in 4 short years it's lost r1 per annum. The cynics may say, oh thats only R1 per year. Well, if you had R40K to bring over, you know have far less @ AU to the dollar. I came with 6500, and managed to start up a new life. Yes we kakked bricks to get going, and ate like true peasants the first few months but now we live like kings, actually better than SA if I'm honest.

Africa has always been a net consumer of money. Only a select few uber rich profit, the rest, we give from our hard earned cash. Here is a quick reality check, stand back and ask yourself, how hard is SARS on you tax wise? Yip, a b@stard on wheels most would say. Now try and get a rebate from the local council for services charged but not rendered (for strikes, they charge for refuse etc, but it didnt get delivered, which is fraud...) You would be lucky to EVER get it. See the mentality difference. It's called entitlement. The same theme pervades how government runs the economy, and that directly influences the value of your hard earned cash. Bring your cash and come and live in a place where at least things work most days, and yes Aus is expensive but man in return for my tax I get pretty bloody good service.

[Donovan83]

I had a good laugh at "kakking bricks"... pretty much sums up the first few months here!

[SurferMan]

At least you are mostly safe now mate, and can enjoy parks, beaches etc at little or no cost. You have a chance to die of old age here! :jester:

[Heymanse]

This pretty much sums up where the Rand is heading......

[SurferMan]

So a steady decline, and a visual of the proverbial "long and slippery slope.." Man I feel sorry for the folks left in SA.

[BronPreston]

Hi All,

Please feel free to sign up for our weekly ZAR foreign exchange market reports which can be found at https://exchange4free.co.za/south-africa-zar-forex-market-reports.html

Our company Exchange4free is the leading foreign exchange company offering money transfer services into and out of South Africa with a ‘Best Price Guarantee’.

We draft a weekly ZAR forex report that we send out to clients covering both fundamental and technical views on the Rand including charting and other services.

We offer free international transfers both into and out of South Africa and are licenced both in SA and Australia.

Please let me know if you need any assistance with your forex or if you have any queries on the South African markets.

Regards

Tara Lawrie

tlawrie@exchange4free.co.za

[SurferMan]

Hi All,

Please feel free to sign up for our weekly ZAR foreign exchange market reports which can be found at https://exchange4free.co.za/south-africa-zar-forex-market-reports.html

Our company Exchange4free is the leading foreign exchange company offering money transfer services into and out of South Africa with a ‘Best Price Guarantee’.

We draft a weekly ZAR forex report that we send out to clients covering both fundamental and technical views on the Rand including charting and other services.

We offer free international transfers both into and out of South Africa and are licenced both in SA and Australia.

Please let me know if you need any assistance with your forex or if you have any queries on the South African markets.

Regards

Tara Lawrie

tlawrie@exchange4free.co.za

Taralawrie,

You need to comply with this forums rules on advertising...see this link.

http://www.saaustralia.org/index.php/topic/40159-a-reminder-of-our-advertising-policy/#entry355449

[chzaau]

Based on this article, the graph tells a lot, I think it might be a good idea to start moving Rands out, if you can't move rands at this time, then a good idea to start thinking about hedging.

http://www.fin24.com/Economy/SA-lives-beyond-its-means-downgrades-to-follow-20140711

[SurferMan]

Sad man, so sad.

[KalahariHarry]

Yes Time to move cash, waiting for comm bank to contact me to open an acc.

Trev

[SurferMan]

And here we go folks, another slide, and check out SBSA's comments....

http://www.iol.co.za/business/markets/currencies/slip-over-r11-to-the-dollar-adds-to-woe-1.1749129#.VBFb9GOuR8E