Rand weakness puts a damper on Christmas spirit

It’s a not so happy Christmas season as the rand exchange rate weakness takes its toll on peak season imports, according to Luke Doig, senior economist at Credit Guarantee Insurance Corporation (CGIC). “The ZAR (rand) has depreciated roughly 16.7% against the greenback (US dollar) and by approximately 18.3% against the euro so far in 2013,” he told FTW. “Meanwhile year-to-date (YTD) September imports have risen by 18% in value. But the vast bulk of this relates to petroleum oils and fuel at roughly R146bn YTD September versus R169.1bn for calendar 2012. Annualised fuel imports for 2013 could amount to R225bn, a 33% year-on-year (y/y) rise.” Doig also noted that, if the economy had been producing at full capacity, this situation would have been significantly worse. Other significant import categories related to capital goods, which are required to satisfy the infrastructural thrust. And these too would have been higher if the rollout of this programme had been as planned, he added. Focusing on imports ahead of the Christmas sales period, there would certainly have been a degree of advance ordering of durable and semi-durable goods, according to Doig. “But within these categories,” he said, “retail sales of household furniture, appliances and equipment have shown a year-on-year decrease. “The frenzy around the Christmas trading period may provide some relief here. But recent consumer confidence data implies a degree of battlefatigue." INSERT Recent consumer confidence data implies a degree of battle-fatigue.