USD/ ZAR
25 May 2020: 17.64
25 May 2021: 13.85
25 May 2020: 17.64
25 May 2021: 13.85
Relentless Fed stimulus has left the US dollar catching hands. Short term rates are at historic lows.
Basically it's really, really cheap to borrow right now.
How do they get the money out there? They go out & buy up US debt... $120bn every single month
Basically it's really, really cheap to borrow right now.
How do they get the money out there? They go out & buy up US debt... $120bn every single month
When it comes to commodities, we're in the rich part of the cycle. There's a shortage of basically everything.
Lumber, coffee, olive oil, avos.
Add logistics difficulties thanks to COVID & you make supply shortages worse.
We benefit from higher priced precious metals exports.
Lumber, coffee, olive oil, avos.
Add logistics difficulties thanks to COVID & you make supply shortages worse.
We benefit from higher priced precious metals exports.
Soz if you're a global investor looking to score some juicy yield (& you weren't allowed to stake crypto).
Where would you put your cash?
Just under 9% on SA govt bonds or close to zero on US bonds?
But wait, there's still inflation. You need to look at the "real yields"
Where would you put your cash?
Just under 9% on SA govt bonds or close to zero on US bonds?
But wait, there's still inflation. You need to look at the "real yields"
The real yields in the US are bad, real bad, Michael Jackson.
When yields are near zero, many investors look to gold (& some even to BTC) as more attractive non-yielding assets.
Adjusting for the inflation differential & default risks, SA govt bonds are still attractive.
When yields are near zero, many investors look to gold (& some even to BTC) as more attractive non-yielding assets.
Adjusting for the inflation differential & default risks, SA govt bonds are still attractive.
But just how long can investing in SA debt remain attractive?
Credit ratings agencies have maintained their outlook on SA.
The negatives?
- The amount of debt we have and worse, our debt service costs (interest)
- Unemployment & a shrinking tax base
- Fiscal mismanagement!
Credit ratings agencies have maintained their outlook on SA.
The negatives?
- The amount of debt we have and worse, our debt service costs (interest)
- Unemployment & a shrinking tax base
- Fiscal mismanagement!
The Rand strengthening looks lovely on paper & makes for great headlines but really means nothing if it doesn't make our lives better.
Our petrol price remains at its highest levels despite ZAR strength (& oil prices nowhere near it's all time highs) - thanks to fuel taxes.
Our petrol price remains at its highest levels despite ZAR strength (& oil prices nowhere near it's all time highs) - thanks to fuel taxes.
One thing to watch out for, are banks aggressively lending out cash during a low rate period.
Qualifying today doesn't always mean affordability in the future.
When rates do ratchet up, definitely worth making sure you have headroom on the home loan/ vehicle repayments.
Qualifying today doesn't always mean affordability in the future.
When rates do ratchet up, definitely worth making sure you have headroom on the home loan/ vehicle repayments.
Useful for FX:
Fed policy minutes, commodity prices, inflation estimates, interest rate forecasts, credit rating agency outlook
Less useful for FX:
"The Rand is at fair value, might strengthen or weaken, nobody knows"
"The Rand is going to R60 to the dollar"
Fed policy minutes, commodity prices, inflation estimates, interest rate forecasts, credit rating agency outlook
Less useful for FX:
"The Rand is at fair value, might strengthen or weaken, nobody knows"
"The Rand is going to R60 to the dollar"
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