Wednesday, 24 September 2008

Myth of the free falling rand...



The inevitable Zimbabwesque plunging of the rand into the void is an idea burnt into the brain of most white South Africans it seems. Every time a mouse squeaks the whole country gets their schlongs out and starts their usual festival of urinating nonsensical pessimism everywhere. Just take a look at the S.A.S sites comment section. Well as long as you can without goughing your eyes out or begging for a lobotomy.

(Notice I say scholongs , because if we’re honest we’d admit your average woman cares or knows as much about the economy than she does everything apart from shoes, which is pretty much sweet f#ck all.)

So every time something happens in the country there’s mass panic and everyone is sure that finally the rand is ready to take its plunge in obscurity. The inherent panic causes people to meddle with/withhold their investments and the market obviously dips for a moment , just long enough to perpetuate and in their minds validate their fears. The rands slides rapidly down to around 12 to the dollar. They start getting phone calls from their brokers advising them to start packing their suitcases full of Tito’s big five and hauling them off to foreign shores. People stop and pay more attention to manic street preachers than usual. Church collection plates gets heavier. In short we lose our collective minds.

A few months later it’s the arduous and inevitable process of buying back those rands you invested offshore in stagnating European funds for 60% of their worth because the rand as always has corrected itself to around 8 to the dollar. We’ve seen it all before. Twice in the last 10 years.

There is a reason my friend that the rand is one of the most traded currencies in the world. Whenever our marbles go tumbling down the drain pipe and the rand slides down , foreign investors (and a few smart South African ones) start rubbing their hands in glee. When the time is right and the rand is seriously undervalued they pump in the dosh and indeed it corrects itself. Score one for smart people. Dummy takes it up the butt again.

Another reason is the the rand reacts to international trends. They dip and we dip…..but we have a unique get out of jail free card. What do people do when they are feeling a little jumpy about their markets/currencies ? They stuff their money into gold stocks and the price goes insane. Little old us crutch our battered currency up on our huge gold industry and off we go again.

It’s your money , but before you buy into this free falling rand myth , don't be upset when your joyride gets interupted by a parachute.

24 comments:

Anonymous said...

Wow - would you believe it. Our ultra liberal little chicken man is a sexist!!

The Rooster said...

I'm not sexist. I'm treating women exactly the same I'd treat men (if men were as stupid, self centred, had contributed absolutely nothing to the advancement of the species, Narcicistic and shallow). I thought equality was treating each other the same ? I don't walk on eggs shells and reserve my opinion regarding my fellow men, so I don't do it with women either.

Anonymous said...

Too right rooster old chum! Love these little "rough spots" the rand goes through! Coming up for summer in SA and the exchange rate is ripe for a holiday conversion. (until everyone jumps on the same boat (no pun intended) and the rand corrects itself again.
Viva la ANC turmoil...viva!

Anonymous said...

Rooster is right.

Don't panic. Just be aware.

The rand value has only dropped 84% against the Pound in 10 years.

http://www.scribd.com/doc/6192825/zar-to-rate

The Rooster said...

Anon and it dropped over 200% the 20 years before that. We went off the gold standard and the South African economy was allowed to float and corrected itself and also went through high periods of inflation. Relatively speaking now your average south Africa has much more spending power now than 10 years ago whether he stays at home or goes abroad. Take that from someone who lived in engand in that time.

troubled said...

Johannesburg - South Africa has slipped to position 54 in the Transparency International Corruption Perceptions Index (CPI) from position 43 in 2007

it would be nice if our hard earned currency was used correctly though :)

troubled said...

scariest thing i saw all week

"There is no one in the ANC that can tell us what to do," Malema said.

Johannesburg - Regarded by some as troublemakers and courted by others as kingmakers, the African National Congress' Youth League has been basking in the limelight as its hero Jacob Zuma closes in on the nation's presidency.

Julius Malema, the youth wing's leader, was this week gloating that his group played a key role in the downfall of President Thabo Mbeki, who was forced to resign at the weekend after a judge threw out a corruption case against Zuma.

The Rooster said...

Actually they have pretty much reigned in the "youth" leaders. If you'd followed South Africa politics you'd know that there are far fewer extreme leftists today than in the past in the A.N.C.. They will always be a voice for the few radicals who don't understand why the government isn't coming through on its socialistic basis as strongly as it could.

The Rooster said...

Well the perception that corruption has gone up tells us nothing really. We're notoriously negative people with our news full of sound bites of people joe citizen spitting venom about the country all the time. It's really quite unique to our quirky little country.

The Rooster said...

Afrikaaners calling people stupid is a celebration of hypocrisy. In fact that absurd idea just inspired what i'm going to write today. Thanks "Koos".

Anonymous said...

Fowl-fuck, once again you have missed the point. How do you build long term wealth ie security when the country's currency is volatile?
Watch your pension and investments go down the proverbial toilet. Pathetic, the "brains trust" have left already.

The Rooster said...

What are you on about ? Are you making the crazy statment that the South African markets and funds have done badly in recent years ? Please confirm if you really are saying that. Even you can't be THAT stupid to actually say that.

If you're just saying the currency is volatile .....yes it is....but if that's anything to do with our recent economic performance then I hope it gets even more volatile.

Look guys...you can criticise South Africa for many things...but not the economy. It's performed extremely well in recent years.

Anonymous said...

Go to

http://www.thedti.gov.za/econdb/resbank/rb5366JJ.html

Real effective exchange rate of the rand: Average for period( 1970 - 2002)

Read it and weep.

Anonymous said...

Go to

http://www.thedti.gov.za/econdb/resbank/rb5364JJ.html

Nominal effective exchange rate of the rand : Average for period(1970 - 2002)

Now have a real good cry.

Anonymous said...

South Africa / U.S. Foreign Exchange Rate: South African Rand to One U.S. Dollar


Year Month R -$
1971 Jan 0.72
1971 Feb 0.71
1971 Mar 0.71
1971 Apr 0.71
1971 May 0.71
1971 Jun 0.71
1971 Jul 0.71
1971 Aug 0.71
1971 Sep 0.71
1971 Oct 0.71
1971 Nov 0.71
1971 Dec 0.73
1972 Jan 0.76
1972 Feb 0.75
1972 Mar 0.75
1972 Apr 0.75
1972 May 0.75
1972 Jun 0.75
1972 Jul 0.80
1972 Aug 0.80
1972 Sep 0.80
1972 Oct 0.80
1972 Nov 0.78
1972 Dec 0.78
1973 Jan 0.78
1973 Feb 0.74
1973 Mar 0.71
1973 Apr 0.71
1973 May 0.71
1973 Jun 0.68
1973 Jul 0.67
1973 Aug 0.67
1973 Sep 0.67
1973 Oct 0.67
1973 Nov 0.67
1973 Dec 0.67
1974 Jan 0.67
1974 Feb 0.67
1974 Mar 0.67
1974 Apr 0.67
1974 May 0.67
1974 Jun 0.67
1974 Jul 0.67
1974 Aug 0.68
1974 Sep 0.70
1974 Oct 0.70
1974 Nov 0.70
1974 Dec 0.69
1975 Jan 0.69
1975 Feb 0.68
1975 Mar 0.67
1975 Apr 0.68
1975 May 0.68
1975 Jun 0.68
1975 Jul 0.72
1975 Aug 0.72
1975 Sep 0.77
1975 Oct 0.87
1975 Nov 0.87
1975 Dec 0.87
1976 Jan 0.87
1976 Feb 0.87
1976 Mar 0.87
1976 Apr 0.87
1976 May 0.87
1976 Jun 0.87
1976 Jul 0.87
1976 Aug 0.87
1976 Sep 0.87
1976 Oct 0.87
1976 Nov 0.87
1976 Dec 0.87
1977 Jan 0.87
1977 Feb 0.87
1977 Mar 0.87
1977 Apr 0.87
1977 May 0.87
1977 Jun 0.87
1977 Jul 0.87
1977 Aug 0.87
1977 Sep 0.87
1977 Oct 0.87
1977 Nov 0.87
1977 Dec 0.87
1978 Jan 0.87
1978 Feb 0.87
1978 Mar 0.87
1978 Apr 0.87
1978 May 0.87
1978 Jun 0.87
1978 Jul 0.87
1978 Aug 0.87
1978 Sep 0.87
1978 Oct 0.87
1978 Nov 0.87
1978 Dec 0.87
1979 Jan 0.87
1979 Feb 0.86
1979 Mar 0.84
1979 Apr 0.85
1979 May 0.85
1979 Jun 0.85
1979 Jul 0.84
1979 Aug 0.84
1979 Sep 0.83
1979 Oct 0.83
1979 Nov 0.83
1979 Dec 0.83
1980 Jan 0.82
1980 Feb 0.81
1980 Mar 0.81
1980 Apr 0.81
1980 May 0.79
1980 Jun 0.78
1980 Jul 0.76
1980 Aug 0.76
1980 Sep 0.75
1980 Oct 0.75
1980 Nov 0.75
1980 Dec 0.75
1981 Jan 0.75
1981 Feb 0.77
1981 Mar 0.79
1981 Apr 0.81
1981 May 0.84
1981 Jun 0.87
1981 Jul 0.92
1981 Aug 0.95
1981 Sep 0.95
1981 Oct 0.96
1981 Nov 0.96
1981 Dec 0.97
1982 Jan 0.97
1982 Feb 0.98
1982 Mar 1.02
1982 Apr 1.05
1982 May 1.06
1982 Jun 1.12
1982 Jul 1.15
1982 Aug 1.15
1982 Sep 1.15
1982 Oct 1.16
1982 Nov 1.14
1982 Dec 1.09
1983 Jan 1.07
1983 Feb 1.10
1983 Mar 1.09
1983 Apr 1.09
1983 May 1.08
1983 Jun 1.09
1983 Jul 1.10
1983 Aug 1.12
1983 Sep 1.11
1983 Oct 1.13
1983 Nov 1.19
1983 Dec 1.22
1984 Jan 1.26
1984 Feb 1.23
1984 Mar 1.22
1984 Apr 1.25
1984 May 1.28
1984 Jun 1.31
1984 Jul 1.51
1984 Aug 1.57
1984 Sep 1.66
1984 Oct 1.77
1984 Nov 1.80
1984 Dec 1.90
1985 Jan 2.16
1985 Feb 1.98
1985 Mar 1.99
1985 Apr 1.94
1985 May 1.99
1985 Jun 1.98
1985 Jul 1.96
1985 Aug 2.33
1985 Sep 2.54
1985 Oct 2.61
1985 Nov 2.66
1985 Dec 2.70
1986 Jan 2.36
1986 Feb 2.09
1986 Mar 2.04
1986 Apr 2.05
1986 May 2.19
1986 Jun 2.54
1986 Jul 2.56
1986 Aug 2.61
1986 Sep 2.31
1986 Oct 2.25
1986 Nov 2.25
1986 Dec 2.23
1987 Jan 2.10
1987 Feb 2.08
1987 Mar 2.07
1987 Apr 2.02
1987 May 2.01
1987 Jun 2.02
1987 Jul 2.06
1987 Aug 2.08
1987 Sep 2.05
1987 Oct 2.05
1987 Nov 1.97
1987 Dec 1.95
1988 Jan 1.98
1988 Feb 2.05
1988 Mar 2.13
1988 Apr 2.14
1988 May 2.21
1988 Jun 2.27
1988 Jul 2.40
1988 Aug 2.45
1988 Sep 2.46
1988 Oct 2.47
1988 Nov 2.39
1988 Dec 2.35
1989 Jan 2.38
1989 Feb 2.46
1989 Mar 2.54
1989 Apr 2.55
1989 May 2.67
1989 Jun 2.78
1989 Jul 2.69
1989 Aug 2.72
1989 Sep 2.79
1989 Oct 2.67
1989 Nov 2.63
1989 Dec 2.57
1990 Jan 2.55
1990 Feb 2.54
1990 Mar 2.62
1990 Apr 2.66
1990 May 2.65
1990 Jun 2.66
1990 Jul 2.63
1990 Aug 2.57
1990 Sep 2.57
1990 Oct 2.54
1990 Nov 2.52
1990 Dec 2.54
1991 Jan 2.56
1991 Feb 2.54
1991 Mar 2.66
1991 Apr 2.73
1991 May 2.80
1991 Jun 2.86
1991 Jul 2.88
1991 Aug 2.87
1991 Sep 2.83
1991 Oct 2.83
1991 Nov 2.79
1991 Dec 2.77
1992 Jan 2.78
1992 Feb 2.82
1992 Mar 2.88
1992 Apr 2.88
1992 May 2.85
1992 Jun 2.81
1992 Jul 2.76
1992 Aug 2.76
1992 Sep 2.80
1992 Oct 2.89
1992 Nov 3.00
1992 Dec 3.01
1993 Jan 3.07
1993 Feb 3.12
1993 Mar 3.18
1993 Apr 3.17
1993 May 3.18
1993 Jun 3.24
1993 Jul 3.35
1993 Aug 3.37
1993 Sep 3.41
1993 Oct 3.39
1993 Nov 3.37
1993 Dec 3.38
1994 Jan 3.41
1994 Feb 3.45
1994 Mar 3.46
1994 Apr 3.58
1994 May 3.63
1994 Jun 3.63
1994 Jul 3.67
1994 Aug 3.60
1994 Sep 3.56
1994 Oct 3.54
1994 Nov 3.53
1994 Dec 3.56
1995 Jan 3.54
1995 Feb 3.56
1995 Mar 3.60
1995 Apr 3.60
1995 May 3.66
1995 Jun 3.66
1995 Jul 3.64
1995 Aug 3.64
1995 Sep 3.66
1995 Oct 3.65
1995 Nov 3.65
1995 Dec 3.66
1996 Jan 3.64
1996 Feb 3.74
1996 Mar 3.93
1996 Apr 4.21
1996 May 4.37
1996 Jun 4.35
1996 Jul 4.40
1996 Aug 4.53
1996 Sep 4.50
1996 Oct 4.58
1996 Nov 4.66
1996 Dec 4.69
1997 Jan 4.64
1997 Feb 4.46
1997 Mar 4.43
1997 Apr 4.44
1997 May 4.47
1997 Jun 4.50
1997 Jul 4.56
1997 Aug 4.69
1997 Sep 4.69
1997 Oct 4.71
1997 Nov 4.84
1997 Dec 4.87
1998 Jan 4.94
1998 Feb 4.93
1998 Mar 4.97
1998 Apr 5.05
1998 May 5.09
1998 Jun 5.39
1998 Jul 6.23
1998 Aug 6.32
1998 Sep 6.10
1998 Oct 5.80
1998 Nov 5.65
1998 Dec 5.90
1999 Jan 5.99
1999 Feb 6.11
1999 Mar 6.21
1999 Apr 6.12
1999 May 6.18
1999 Jun 6.09
1999 Jul 6.12
1999 Aug 6.13
1999 Sep 6.06
1999 Oct 6.10
1999 Nov 6.14
1999 Dec 6.15
2000 Jan 6.13
2000 Feb 6.32
2000 Mar 6.47
2000 Apr 6.65
2000 May 7.02
2000 Jun 6.91
2000 Jul 6.90
2000 Aug 6.96
2000 Sep 7.18
2000 Oct 7.49
2000 Nov 7.69
2000 Dec 7.64
2001 Jan 7.78
2001 Feb 7.82
2001 Mar 7.90
2001 Apr 8.08
2001 May 7.98
2001 Jun 8.06
2001 Jul 8.21
2001 Aug 8.31
2001 Sep 8.68
2001 Oct 9.28
2001 Nov 9.74
2001 Dec 11.68
2002 Jan 11.63
2002 Feb 11.49
2002 Mar 11.49
2002 Apr 11.08
2002 May 10.16
2002 Jun 10.18
2002 Jul 10.10
2002 Aug 10.59
2002 Sep 10.60
2002 Oct 10.31
2002 Nov 9.65
2002 Dec 8.95
2003 Jan 8.69
2003 Feb 8.29
2003 Mar 8.05
2003 Apr 7.66
2003 May 7.66
2003 Jun 7.86
2003 Jul 7.55
2003 Aug 7.39
2003 Sep 7.31
2003 Oct 6.96
2003 Nov 6.72
2003 Dec 6.54
2004 Jan 6.94
2004 Feb 6.75
2004 Mar 6.61
2004 Apr 6.57
2004 May 6.80
2004 Jun 6.42
2004 Jul 6.14
2004 Aug 6.47
2004 Sep 6.53
2004 Oct 6.38
2004 Nov 6.03
2004 Dec 5.72
2005 Jan 5.96
2005 Feb 6.00
2005 Mar 6.03
2005 Apr 6.15
2005 May 6.33
2005 Jun 6.74
2005 Jul 6.70
2005 Aug 6.46
2005 Sep 6.37
2005 Oct 6.59
2005 Nov 6.66
2005 Dec 6.35
2006 Jan 6.08
2006 Feb 6.12
2006 Mar 6.24
2006 Apr 6.08
2006 May 6.31
2006 Jun 6.97
2006 Jul 7.07
2006 Aug 6.95
2006 Sep 7.45
2006 Oct 7.63
2006 Nov 7.25
2006 Dec 7.03
2007 Jan 7.19
2007 Feb 7.18
2007 Mar 7.35
2007 Apr 7.10
2007 May 7.01
2007 Jun 7.15
2007 Jul 6.97
2007 Aug 7.22
2007 Sep 7.10
2007 Oct 6.76
2007 Nov 6.70
2007 Dec 6.84
2008 Jan 7.00
2008 Feb 7.66
2008 Mar 7.99
2008 Apr 7.76
2008 May 7.61
2008 Jun 7.94
2008 Jul 7.61
2008 Aug 7.67

Anonymous said...

Rooster is right.

The Rand value against the pound dropped 200% for the period 1978 - 1998 IE from R2.66 in 1978 to R7.98in 1998.

Therefore the Rand value has only dropped 553% in 30 years against the pound.

So don't panic. Just be aware.

the_weasel said...

"if men were as stupid, self centred, had contributed absolutely nothing to the advancement of the species, Narcicistic and shallow"

You just described yourself and David Hasselhoff.

The Rooster said...

The currency has to change to reflect inflation you idiot in order to keep the real buying power of your rand the same. Over time we can expect the rand to keep slipping slowly as a healthy sign of keeping ourselves competitive. China delibrately keep their currency low for example. The japanese yen is something like 100 to 1 dollar. Does than make Japan poor ? Anytime South Africa wanted they could artificially adjust fiscal policy to make a stronger rand.

In fact it can be said that the inflation in our country is in fact a healthy sign. In years back according to the mcdonalds index and purchising parity ratios etc South Africa was the cheapest country in the world to live in. We're still relatively speaking an extremely cheap country to live , while in the same time salaries have skyrocketing increasing demand for almost all commodities and goods. When demand increases then supply dwindles and we get increased prices...so what happens ? Inflation. In this context inflation can represent a healthy economy. One where demand drives growth. It's really simple and a 5 year old coyuld understand it. I hope that's the last you'll throw the meaningless currency statistics at us.

Anonymous said...

The currency has to change to reflect inflation you idiot in order to keep the real buying power of your rand the same.

BULL SHIT.
The rand has gone down because investors dont trust the economy in SA and that makes the rand weak.

Anonymous said...

I cant wait for the day when.

US$1=R20.00 and you fuck heads in Sa are paying R50 for a liter of petrol. I will be so happy and be able to say. I TOLD YOU SO.

South Africa Sucks.

KOOS

The Rooster said...

Nope. I tried to explain it to you. There is plenty of investor confidence in the South African market. Do you really think we'd be outperforming any other time in the history of our country if there wasn't ?

I guarantee there is more growth in the South African economy over the past 30 months than any western country you are posting this nonsense from.

Anonymous said...

"The currency has to change to reflect inflation you idiot in order to keep the real buying power of your rand the same. "


So South Africa has inflation but Britain doesn't.

The Rooster said...

No you muppet...but we have more economic demand and growth than they do. There's more demand for resources and less supply because out of the blue everyone is getting richer. Prices go up faster than they do in a stagnant economy like England...inflation happens...and so the rand has to correct itself. This is really simple stuff.

Anonymous said...

Anybody who tries to argue with the almighty rooster is going to get answered back. It doesn't matter what you show him or tell him, SA is the coolest country on the planet, with the greatest sunsets and strongest currency and best inflation and biggest dicks and very little murder (which is all located in Joburg) and a (former) president who is spot on with his AIDS policies and whatever else.

Don't bother commenting on this blog. He's just setting you up anyway, so that can insult and tell you how stupid you are.

Leave this guy alone. Move on to another blog, and he'll eventually go away.