Real Estate Investor Magazine South Africa September 2015 | Page 60

FOREX

The Rand the Pound,

the Boks and the English
Examine UK investment for a South African market
BY ANDREW RISSIK

F

or South Africans, investing and spending time
in Britain has suddenly become more expensive
than it has ever been before. This could not have
come at a worse time for the rugby fans amongst us,
as the cost of supporting our Boks on British soil is at
R20.19 to the Pound.
South Africans of all descriptions have a deep
attraction to the UK, most probably stimulated by
the brief period from 1994 when, as a nation of under
27’s, we became eligible for the two year working
holiday visa, a period that came to a grinding halt
recently when the UK withdrew the privilege because
our government did not want to reciprocate its visa
programme to British nationals under 27 to come and
work in SA.
So while the US Dollar and the Euro are probably
the most traded currencies with the Rand, the Pound
is arguably the most watched by the average individual
in South Africa.
The British economy, in the context of Europe
currency, is light footed, agile and much less socialist

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SEPTEMBER 2015 SA Real Estate Investor

than their colleagues over the channel. This has made
it possible for Britain to manage the ravaging effects
of the 2008 crash far more palatably than Europe as a
whole. The Brits have also accepted austerity in a more
pragmatic way.
Suddenly everything British has become seriously
expensive and for most simply unaffordable… so why
has the Rand performed so badly?
Our Finance ministry finds itself with its back to the
wall as business confidence is set to be further damaged
by the continuing slide of the Rand. Imported inflation
means that rates may need to be increased which in
turn will further slow the stuttering economy.
In theory, Rand weakness is a gift that should
stimulate exports, however this is impossible due to
militant and unproductive labour as well as regular
unplanned power cuts. South Africa is also not deemed
a secure environment for long-term capital investment,
so manufacturing, which in the medium term should
be rising, will most likely not.
The Rand will experience further downward pressure
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