Posts Tagged ‘currency’

Rand Volatility and Trading

The South African  Rand, is currently one of the most traded and volatile emerging market currencies. It  has traded in a range of R6.59/$ to R8.26/$ in 2011, its volatility increasing in the past two months due to global financial turmoil and the European crisis caused by poor performing countries in the euro-zone like Greece.

Rand roaring back

The South Aftican Rand (ZAR) has recovered form it worst levels in the last few days and is Currently Trading at 7.79 to the US Dollar.

The rand is taking leads from  the euro which has recovered quite a bit. The market has also been a bit short and we’ve seen some export selling which have also helped to strengthen  the rand,” a currency trader said.

Although stronger the Rand will still be a highly volatile currency in the near future

South African Rand Under Pressure

The rand being fairly strong the last few months is under pressure and has hit a 14-month low against the dollar on Tuesday the 20th September 2011 , with many factors pointing to more losses for the Rand, already the worst performing Currency among emerging market currencies.

The rand has lost close to 5% to the dollar so far this year, but it is still up about 20% since the beginning of 2009. The strong South African Rand has managed to keep inflation low for the last few years, but with the currently weakening of the South African Rand the outlook for inflation increase is looming

South Sudan New Country New Currency

South Sudan, officially known as The Republic of South Sudan, is a newly established country in East Africa. Its capital and largest city is Juba, located in the southern state of Central Equatoria. The landlocked country is bordered by Ethiopia to the east; Kenya to the southeast; Uganda to the south; the Democratic Republic of the Congo to the southwest; the Central African Republic to the west; and the Sudan to the north. South Sudan includes the vast swamp region of the Sudd formed by the White Nile, locally called the Bahr al Jabal.What is now South Sudan was part of the British and Egyptian condominium of Anglo-Egyptian Sudan and became part of the Republic of the Sudan when independence was achieved in 1956. Following the First Sudanese Civil War, the Southern Sudan Autonomous Region was formed in 1972 and lasted until 1983. A second Sudanese civil war soon developed and ended with the Comprehensive Peace Agreement of 2005. Later that year, southern autonomy was restored when an Autonomous Government of Southern Sudan was formed. South Sudan became an independent state on 9 July 2011 at midnight (00:00) local time following a referendum held in January 2011 in which nearly 99% of voters opted for independence from the rest of Sudan. On 14 July 2011, South Sudan become a United Nations member state. South Sudan has also applied to join the Commonwealth of Nations, the East African Community, the International Monetary Fund,and the World Bank. The country was declared eligible to apply for membership in the Arab League as well.

With the creation of South Sudan a new currency will be used as well known as the South Sudanese Pound

Strong Rand ? Cheap Holiday ?

With the current Rand being strong against some of the major currencies like the US Dollar and the Euro. A lot of people including me would have saved a substantial amount of money while traveling overseas.  I think my trip came out about 15% cheaper then expected. I probably would have saved more if I didn’t book and pay for parts of my holiday all ready earlier in 2010. At that time we thought the Rand looked strong and i wanted to take advantage of  it. Would we have known we would have booked later. But anyways that said it works the other way as well. Weak Dollar/Euro?  Expensive Holiday  for Overseas visitors? I know of a few people who currently have postponed their holidays to South Africa as it would turn out to be more expensive for them as budgeted. Although even with the Strong South African Rand I think holidays in Beautiful  South Africa are still affordable for Overseas Visitors

Currency Nick Names

Currencies are sometimes known or refered  by nick names, here follow some of the most common nick names for currencies

US Dollar USD = Buck / Greenback
Euro EUR = Fiber
British Pound GBP = Cable / Sterling
Canadian Dollar CAD = Loonie
Swiss Franc CHF = Swissy
Japanese Yen JPY = Yen
Australian Dollar AUD = Aussie

Some info about the South African Rand (ZAR)

The South African Rand gets its name from the Witwatersrand, (White-waters-ridge) the ridge that Johannesburg is built on.

In some parts of South Africa money is referred to as “Tom.” This is a creation of Cockney rhyming slang, where the English word “jewelry” was rhymed with “tomfoolery,” and foolery was then chopped off.

South Africa is populated by many different ethnic groups with many different languages resulting in a wealth of slang terms. Coloureds may refer to money as “Kroon” which also means “virginity.” South African Indians call 100 Rands a “Clip,” and may refer to money as “Pano.”

You have heard of or know of others ?

South African Rand (ZAR) Volatility

The movement of the Rand is influenced by multiple factors that are constantly changing. In order to accurately forecast/predict the direction of the Rand, the primary driving force behind the Rand needs to be identified. This, in itself, is a challenging task, as economists more often than not have conflicting and differing views and don’t often reach consensus when forecasting the value of the Rand.

In the past few weeks market participants have once again been surprised by the movement of the Rand. This time bythe shear strength of the currency, resulting in it now being branded as overvalued. This recent Rand strength can,amongst other things, be attributed to dollar weakness and euro weakness due to the financial crisis of certain eu member countries, a strong recovery in the price of commodities, an improvement in global risk appetite and the wide interest rate differential between SA and the rest of the world.

A number of economists have pointed out that a strong Rand has contributed to the disappointing and below expected manufacturing and mining data, mainly due to a weaker exports. On the other side, a strong Rand (ZAR) bodes well for imports.

From a the ordinary man on the streets point of view a strong Rand is positive. It drives inflation lower which in turn increases consumer’s real household income.

Extreme volatility in the Rand can translate into  profits or losses over the shorter term and in turn increase therisk in your portfolio. Your portfolio manager should  be able to successfully tap into any offshore investment opportunities for better diversification in your assets, but at the same time reduce the inherent risk in the currency market.

Will we be seeing the ZAR trading closer to R8,00 against the dollar by end of 2010 or will the ZAR strengthen what is your opinion