Real Estate Investor Magazine South Africa March 2016 | Page 62

INSIGHTS

The Rand and the world
BY ANDREW RISSIK

I

certainly would not have thought that the night
before the budget speech, the Rand would be
nearing R15.00 to the US Dollar, when only two
months ago it touched R17.99. But there are two sides
to any currency story as, in any rate, a pair of currencies
is priced against each other. Every currency is bashed
about and influenced by a wide range of factors that
differ from country to country.

The Rand does not move in isolation

Internationally, there is a lot of uncertainty affecting
how the Rand does against established currencies like
the Pound and the Dollar. To get an accurate idea of
what the Rand is doing you must track it against a
basket of hard currencies. The Rand’s strengthening
against the Pound right now indicates that investors,
who don’t like uncertainty, may be pulling out of UKbased investments. The same may happen later this
year in the US. We as South Africans tend to be very
negative and inwardly focused, but the grass isn’t
necessarily greener on the other side.

Turn the corner, or fall off the cliff

Late last year, we saw Rand weakness and Dollar
strength. This created the perfect storm and smashed
South Africans’ on-shore wealth by almost 30% in
Dollar terms.
Crises do tend to change behaviour and one lives in
hope that someone in the ruling party has taken note
of how the markets punished us recently. President
Zuma certainly read out some positive sounding
intentions during his SONA speech, just as he
dropped a few quiet bombs. As a result, South Africa
continues to appear to most commentators to be on
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MARCH 2016 SA Real Estate Investor

the verge of “a tipping point”.
Quite simply, the country can no longer afford
the wasteful expenditure and abhorrent government
corruption. Minister Gordhan has more support from
members of the public than he realises. Steps must
be taken to beat back the forces that perpetually drag
this country down - the same forces that hold back so
many of our youngsters who dream of freedom and
economic upliftment.

Reverse the outward flows of investment

Two things that will carry South Africa forward are
trust in our career politicians and unity. Unfortunately,
the media, heavily influenced by a powerful elite,
propagates divisive stories that avoid the real issues.
The bottom line is that when the coffers dry up, we
will have to turn somewhere for income and that’s not
going to be a good day for any of us.
If the economy is at the top of the government’s
agenda, then Minister Gordhan must deliver a
concrete list of prioritised interventions. This should
arrest any further economic decline and improve
how South Africa is perceived by both internal and
external investors and, of course, the ratings agencies.
South Africans have traditionally kept their wealth
within the country. However, recent trends show
that even at such low levels, we are developing an
appetite for offshore investment. Now more than ever,
government needs to impress local investors. After
all, what foreigner investor will believe in this country
if we do not believe in it ourselves?

RESOURCES
Sable Forex
www.reimag.co.za