Rand’s Strong Showing Vs Dollar
Rand Continues To Strengthen Vs Dollar
The Rand has been doing relatively well against the US Dollar recently, especially when compared to when lockdown first began.
After a full year of slowly dragging itself back to previous levels, the Rand is now trading at a similar value to around Jan 2020 (before most people were discussing the chance that Covid-19 could make its way to Africa). What is even more encouraging is how the rate has been staying close to the important R14/$ range. At present, it remains around R14.01/$.
In relation to April 2020, the rand has recovered 30% which is significant.
Why Should You Care?
When the Rand does well it influences how much we pay for oil. This impacts on petrol prices and the cost of transporting goods. This affects the prices we pay in shops for things.
The exchange rate also impacts on how much we pay for imported items (since those prices are often set in Dollars). Many of the items we buy from Mobile phones to luxury items are made elsewhere and imported.
This month Moody’s Rating Agency effectively decided to keep their SA credit rating as Ba2 by not releasing any new ratings or reports (on the 7th of May).
‘their rating remains firmly in the “Junk” status band’
This means that their rating remains firmly in the “Junk” status band. This, in turn, means that many large pension funds need to continue to avoid investments in SA Government Bonds. This can only change if international rating agencies lift their ratings out of “junk” or sub investment status.