Woe is the rand

The rand/dollar
exchange rate is placing
strong pressures on SA
manufacturing and trade,
and a recession could be
imminent.
The weak rand is
pushing up prices
of imports, while its
beneficial effects on
cutting the cost of SA
exports to the buyers is
being counteracted by
rapidly increasing freight
rates when converted from
US dollars (in which rates
are quoted) to SA rands.
As recently as March
this year the press were
making much of the rand,
at R12.38 to the dollar,
trading at its worst levels
since 2002.
As reported by
BusinessTech on the 12th
of that month, the local
currency had slipped to a
13-year low of R12.38 to
the dollar the previous day.
And, according to
Trading Economics data
it quoted, the rand had
averaged R4.97 to the
dollar between 1972 and
2015, reaching an alltime
high of R12.45 in
December of 2001 and
a record low of R0.67 in
June of 1973.
But that “13-year low” is
now overshadowed – with
the rand on Thursday,
August 27, having slumped
a further 6.14% from that
March 12 rate to its new
all-time low of R13.14 to
US$1.
The on-going bleat from
economists is that the poor
state of the SA economy is to
blame – with an increased
current account deficit,
insufficient local savings,
weak gross domestic
product (GDP) growth and
the ongoing power crisis
three main factors. Add
to that, they also said, the
burgeoning strength of the
US dollar hitting SA and
other emerging economies’
currencies for six.