The South African Rand and What You Need To Know

The rand (ZAR) is the currency of South Africa . The rand has been on the decline since the end of 2010, and has devalued aggressively over the last year to historic levels now seen. The rand is a high-beta currency, which means any moves against the dollar tend to be more pronounced than those in other currencies. It is also strongly correlated to risk appetite.

The weakness in rand has been down to domestic uncertainties, external imbalances and weak global demand. The ongoing unrest in South Africa’s mining sector – which relies heavily on exports of Gold and other metals – is dragging down the country’s economy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As the chart illustrates, since 2010 we have seen the rand devalue over 70% against Sterling, and shockingly 30% of this was last year alone.

However, some currency strategist are now of the view that the outlook for the rand is positive. The rand is undervalued following the strong depreciation in recent years. With stronger economic growth, an improvement in exports, manufacturing industry and the mining sector the rand may appreciate and reverse the trend.

Anyone who is looking at buying a property in South Africa, and may have a requirement to exchange funds into ZAR for any purpose should seriously consider speaking to an independent currency broker. Even if the requirement is simply to repatriate salary, or cover costs of living abroad an independent broker should always be more competitive than the high street banks.

Also, by fixing a favourable rate in a volatile market, it is possible to lock in the final cost and avoid any risk in the event that the foreign currency starts to appreciate in value.

World of Expats is now working together with Cornhill FX, a bespoke London based brokerage, to help individuals with this process.

To contact a Currency Consultant, please call 0207 710 9614 or email the World of Expats contact Jamie Hughes on jamieh@cornhillfx.com

 

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