# General Business Category > Business Finance Forum >  Rand exchange rate

## Dave A

The Rand has been bid at around R9 to the US Dollar this morning. That's a slide of over R1 in two weeks. Just credit crunch jitters, or something more ominous?

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## wynn

Dammed Yankees are buying rands on the sly and driving the price up!

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## Dave A

Other way round I'd have thought. Too many Rand sellers and not enough buyers.

I admit I'm mystified. 
The US bail-out plan looks on - the Rand slides.
The US bail-out plan is off - the Rand slides.

And not in little bits - it's *big* chunks.

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## SilverNodashi

does it perhaps have anything todo with the JSE "flaw" ?

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## Graeme

Overseas investors are selling SA shares/bonds and repatriating their capital.

Same thing is happening throughout the developing world, except China.

The bloodletting here has not been anywhere as severe as in the Developed World  The National Credit Act saved us.  The hammering in the Developed World is not even halfway through.

The weakening of the Rand will hugely assist our exporters.  The Cape fruit farmers and the SA Wine Industry are extatic.

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## Dave A

It must be quite a flood. The Rand was holding quite well up until now despite our ongoing current account deficit and this year's capital exodus.

ps. What JSE flaw?

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## Dave A

Rand weakness may be with us for a while.



> The rand is unlikely to stabilise in the next week or two, Kruger International economist Ulrich Joubert said on Wednesday after volatile trade. 
> 
> It would not stabilise until the international markets did, and even then, would probably remain weak for some time, he said.
> 
> The rand dropped to R9,45 against the dollar on Wednesday, its worst level in six years, but recovered to R9,26 by 4pm.
> 
> South Africa had a well-developed financial system that made it easy for people to enter the financial markets, and unfortunately also easy to move out -- as was happening. 
> 
> Right now, capital was flowing out of the local markets into the rest of the world 
> ...

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## Dave A

Trevor Manuel on the subject:



> Manuel also said South Africa's banks were well-equipped to deal with the global financial crisis, but that they may be affected by restricted access to foreign exchange, Business Day said.
> 
> "If liquidity dries up, how do you finance cross-border deals -- be it in trade, investment, or links into the global payments system? Raising foreign exchange will be very tough in an illiquid market," he was quoted as saying.
> 
> Manuel said a weak rand -- which on Wednesday hit its lowest level against the dollar in almost seven years -- may boost the cost of South Africa's ambitious infrastructure plans and said spending on soccer stadiums and transport ahead of the 2010 Soccer World Cup should be contained.
> 
> "Building costs are a huge threat to what we want to do. I'm not too concerned, but we need to be watching it," he was quoted as saying.
> full story from M&G here


Problems accessing foreign exchange - wasn't that the root of Zimbabwe's fuel supply problem?  :EEK!:

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## wynn

Really, so long as the oil price falls faster than the rand and we get an interest rate cut or two, maybe we can weather this together!

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## Morticia

Better not to drop the interest rate now.  Crazy as it may seem, but we need foreign investment BADLY and dropping rates will just chase potential investors away  - seeing that we don't have much else on offer to lure investors into sunny Souf Efrika...

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## IanF

In my crystal ball, the milestone for the exchange rate will be next years confederations cup. If we can pull that off without a fiasco that will change the the sentiment towards us. This assuming our politics don't suffer from foot in mouth before then.

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## Dave A

> Better not to drop the interest rate now.  Crazy as it may seem, but we need foreign investment BADLY and dropping rates will just chase potential investors away


Holding the rate certainly steadied the Rand ship for now. But it's also suppressing the local economy.

Which is more important?

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## Dave A

I'm still rubbing my eyes in disbelief. WTF happened to our exchange rates yesterday, or was it last night?

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## Graeme

Could be the same thing that is trashing the New Zealand exchange rate - Northern hemisphere investors repatriating their capital.

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## Dave A

Some big overnight orders. Whoever it is, it looks like they're prepared to take a pasting.

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## Wolf

And I get fully hit by the weak rand. After fighting for half a year to get the business finance I am so frustrated because the exchange rate is eating my budget up. 

I wanted to make the payment 4 weeks ago already (british pounds) when everything was still perfect for me, but things are so slow and I wasn't able to because of import licenses and all this ****. Now I have to make the payment within the next 2 weeks and all I can do I just hope and pray to get better. It costs me 50.000 Rand more to buy the stock, which means I have 50 grand less for marketing. It is so frustrating  :Banghead:  :Banghead:  :Banghead:

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## Dave A

Hopefully it will all be worth it in the end, Exopacific.

Here is the cause of your pain:



> The flight to safety from both established and emerging markets saw R20-billion withdrawn from South Africa in September, according to Reserve Bank figures.
> 
> Figures for October are not available, last week foreigners were net sellers of equities to the value of R9,6-billion.
> full story from M&G here


Ouch!

And let's remember the Rand held fairly well for most of September. October's numbers are going to be ugly  :Frown:

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## daveob

*It's CHRISTMAS !!!!*

 :Clap:  :Clap: 

Here's a screenshot of the Exchange Rate this morning from http://www.fin24.com/markets/Main.aspx#currencies

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## Dave A

Looks like Christmas is over already. Showing 10.06 now.

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## Wolf

> Hopefully it will all be worth it in the end, Exopacific.
> 
> Here is the cause of your pain:
> 
> Ouch!
> 
> And let's remember the Rand held fairly well for most of September. October's numbers are going to be ugly


That's really bad. I hope the shock will be over soon and the rand will recover quickly, at least a bit, PLEASE!!

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## Wolf

I am checking the rate constantly, and I am saying "IT IS ENOUGH NOW"!!!

When will this stop??? I am afraid we will see numbers like 1GBP=20ZAR within the next 3 days  :Rant1:  :Banghead:  :Yikes:  :Crazy:  :Taz:  (missing the vomitting smiley)

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## daveob

I know that I am going to have to duck when I say this, and ExoPacific, I do feel for you, but .....

what's one man's pain is another man's gain.

Imagine the following :

you have an online business, and a few month's back you got GatVol of the local red tape, taxes and hassles, so you moved your company off shore. All your online sales were credit card transactions which were processed and converted into GBÂ£, and paid out to your GBÂ£ bank account ( at a rate of about 1:15 ) and no tax payable on any of it.

Now the exchange rate has got better / worse ( depending on your view ) you get to use your international debit card to buy things ( new aircon for the run-about Toyota, dual screen DVD player for the kids for Christmas, etc ) at a rate of 1:18.

But yes, we do need it to get back a bit lower so we can move some more ZAR to GBÂ£.

Just a look from a different angle.

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## Dave A

It's not so much the rate that gets to me - it's the wild range. When I put through a transaction, I just *know* that the bank is going to process my transaction at the worst rate of the day...

OK - the rate gets to me too..  :Wink:

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## IanF

I just wonder if the rand hasn't been overvalued for the past few years. When you look at all the manufacturing companies that closed down. 
It is going to cause pain, the paper rep came in today and said they are planning on an increase in November and January again looking for about 30% overall. :EEK!:  Paper is priced on import parity and a lot is not made locally anymore.
It will be interesting to see where the levels eventually settle. Interesting times.

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## Dave A

The only reasonably reliable pattern I've seen on the Rand exchange rate is that it collapses quickly and strengthens slowly  :Frown:

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## Pap_sak

In sports, items made in China are generally going up 25 - 30%, and that’s NOT taking into account the rand plummeting - I'm guessing we will see price rises of 40 - 50%. Right now, local is lekker!

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## IanF

> In sports, items made in China are generally going up 25 - 30%, and thatâs NOT taking into account the rand plummeting - I'm guessing we will see price rises of 40 - 50%. Right now, local is lekker!


What is the new level of the Rand going to be? At the moment it looks like between 10-11 to the US$!
Any crystal ball gazers here to tell us?

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## Dave A

I'm encouraged by Trevor Manuel's medium term budget policy statement (quite a good overview here).

Barring any major shocks or change in policy, I suspect the Rand will gradually strengthen as has been its habit after any major fall. My cautionary on taking that too much to heart, though, is the potential for unexpected surprises remains higher than usual at the moment.

That budget speech raises some discussion-worthy points, but that probably deserves its own thread.

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## Dave A

Seeing the Rand didn't do well yesterday, I thought that maybe my mildly optimistic view of Trevor Manuel's budget speech yesterday was too optimistic. But I see JZ was also on show, and that performance was considerably less inspiring of confidence.

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## Marq

I think we went from about R10 yesterday morning to R11 now. 

The only international thing out there was JZ trying to woe (Freudian LOL)  the Americans. I don't think much credence would have been given to the mini budget given the history and electioneering etc and cannot think of anything else out there that would affect it right now. If they all bounced back yesterday on the markets making the dollar stronger - perhaps the rand was left behind and we now see its true reflection once balance is found on the international dollar/euro side again.?

Doesnt seem like the international market is impressed with the new ANC head though. Perhaps some backing will be forwarded to the new opposition now and we can see a real ding dong interesting battle. I'm looking forward to that. 

I can't see the rand really recovering until our elections have been settled and the zim debacle sorted out. Both without backlash and problems. mmmm.....given that........will we ever see it back again?

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## Morticia

Ahh the good old days of ZAR0.50 = US$1........

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## Wolf

and the weakening goes on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on  :Gun Bandana: 

It is incredible. Would be better for me to move back to Austria and leave this South African disaster behind me.

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## Wolf

I can't f****** believe what happened within the last 3 hours.

How am I supposed to afford this sh**? I will go bankrupt before the business even started.

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## Dave A

You're just going to have to charge 40-50% more for your product...

Obviously the capital outflow is not over yet.
What was our all time low? About R13.50 to $1, I think.

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## Wolf

and how many potential clients will I lose because of the higher price?

But I have seen the pound went down a bit again.

And btw, do all the banks have the same rate at a certain time or do I have to compare their rates before I make the transfer?

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## Dave A

I think each bank handles their own forex transactions, so there is a possibility of rate differences. I'm uncertain of the prospects of being given a binding rate before the transaction is processed, though. When depositing foreign funds, my experience is that they'll only give an *indication* as to the final rate. I end up being stuck with whatever rate they end up transacting at. But maybe I don't make enough noise or the amounts aren't enough to fight about. 

It'll be interesting to hear your experience once you get there.

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## duncan drennan

I am a little bit irritated with one of my suppliers. I used them instead of buying directly via a credit card transaction. The quote they gave me was long before the volatility and the purchase order was given on the same day. Now they want to charge me based on the cost when it landed. We'll see what price they want to charge....

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## daveob

I would say that if you have a quote, and it's dated ( and preferably valid for  x  number of days), then that's the price you should pay.

You asked for the quote, they supplied it, you ordered, they supply, you pay the quoted price.

Now if the quote says something about "subject to US$ exchange rate applicable on the day of landing" then that's a different story.

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## Yvonne

Our IT company has the same problem, their supplier's now refuse to permit a quote to be valid for ANY period of time, the argument it that he has to charge the current exchange rate, regardless of when he purchased his stock,  as this is now the cost of his "replacement" stock!

Have you ever heard of a reduction in a quote because the exchange rate of the replacement stock was going to be less due to a currency fluctuation?

Yvonne

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## Wolf

Never heard about something like this. Either they quote in the currency of origin or in Rand. If they quote in Rand they should calculate with a rate that mustn't be corrected due to fluctuation. If the quotation doesn't say anything that daveob said, then I would insist on getting the quoted price. Everything else is ridiculous and pathetic.

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## Wolf

Fate is with me!

Payment will be done on monday. Rate is logged in at 17.4. If it stil drops like this I will renegotiate. 

 :Bananadance:   :Bananadance:   :Bananadance:   :Bananadance:   :Bananadance:

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## Dave A

Good luck!

I'd better start paying a little attention to the GBP too - my wife is wandering over there for ten days pretty soon.

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## Dave A

Wow!

R44 billion out so far this month.



> RMB analysts agreed that the rand is in for another tough day.
> 
> "Not helping is foreign selling of local portfolio assets has accelerated, now totalling R44 billion for the month to date. Unless this drops off pretty soon the rand is in serious trouble - especially as none of the budget speech, the financial stability report or Governor Mboweni's comments last night showed any indication of pending action by the authorities.
> full story from Business Report here


No wonder the Rand is all over the park!

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## Wolf

:EEK!:

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## duncan drennan

> The quote they gave me was long before the volatility and the purchase order was given on the same day. Now they want to charge me based on the cost when it landed. We'll see what price they want to charge....


So the price has increased around 17%. I'm a little unsure what leverage I have to bargain the price down a bit, after all I need those components soon - any thoughts?

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