Rand weakens

[ians]

"Rand weakens, price increase imminent", this is a message I just received from a supplier. Discount offered until price increase

Wage increase single digit, how on earth do you survive with prices going up by the day.

You put petrol the price is over R 13, the price for bread and milk everyday 2 litre R ranges from R12 to R20 depending if I get 2 packets or a 2 litre bottle, bread R10.

I get the sh!ts with my wife because the food/grocer/cleaning bill has gone from R900 when I met her to almost R5000 if we had to buy the same stuff. We have managed to cut it down to around R3000 because we take the specials and shop at various places and just do without certain things.


It is scary to think how some people survive on the salaries they do.

[IanF]

What increases are you giving your staff?
I think 8-10% is fair!

[Justloadit]

Yes but have you been able to maintain business with the increase selling price?

[IanF]

Yes but have you been able to maintain business with the increase selling price?

Yes as the input costs also rise and customers understand that.

[vieome]

<rant>Well at first glance the weakening of the rand is welcome as it could increase exports, however I think it is a start of a trend of continued weakening and estimate by year end the rate will be about 20R to the dollar. While it would seem like a simple solution is to just increases prices, and the result rise in inflation will have a knock on effect. In the case of importers they find themselves with less money for replacement of goods, and in future will try and stock up on dollars to avoid further falls in the rate, thus increase demand for the dollar . The rand will further weaken as demand for the rand will decrease from country's like Zimbabwe who opt for the stronger dollar. Well we are drifting into the arena of the unwell, knocking on the animal farm door. Salary and wage increases will not really be enough to fight of the constant inflation. So people will try and be wise by stocking up on goods to avoid future price increases, eventually some form of black market will open for those goods.

</rant>

[desA]

A useful time to be selling expertise offshore.

[Dave A]

If the Rand was weakening and we were seeing buoyant exports as a result, at least there would be some light at the end of the tunnel. But those export numbers are looking pretty flat.

It really looks like there's a serious structural problem in the SA economy right now.

[wynn]

And as long as the unions keep up with their ridiculous demands and carry on striking at the drop of a hat and the employers keep ignoring the unions instead of negotiating before strike season the rand will stay in the crapper.

Seems to me that big business thinks that for every 1.2 months the workers are on no work no pay strike they can afford to give them a 10% wage increase and come out in the same financial position as they were before the strike, provided they roll up the lost production/sales within the financial year without paying overtime? which is usually the case because production is usually so low that a slight acceleration is not noticed by the sheeple.

And as for the unions WTF?
If you go, or stay on strike, more that 4 days for every 1% increase, you are going backwards (the break even is 3.65 days per 1%) unless you can get overtime to catch up with lost production.

[Justloadit]

Unions do not do logical thinking.
There usually is negotiations long before strikes occur.
The unions are the ones who seem to ignore agreements.
Usually agreements are an increase of x amount this year, and x again next year, however the unions seem to ignore this and again go on strike the next year. I think in their opinion, agreements are for employers to keep not for union members to follow.

[desA]

Dave A

It really looks like there's a serious structural problem in the SA economy right now.

The structural problem began with enforced BBBEE.

[Dave A]

Part of this article - MPC increases repo rate to 5.5%:

Marcus outlined the balancing act faced by the Reserve Bank, which included reacting to sharply depreciating currencies, capital outflows, slowing growth, rising inflation, a significant current account deficit and deteriorating consumer confidence. These factors combined, said Marcus, pose "policy challenges" and "very difficult trade-offs for many emerging markets".

It's a pretty deadly cocktail. And frankly increasing the interest rate isn't going to be enough to unravel it - not by a long shot.

Worst of all, that list is far from complete.

Add crippling strikes, electricity supply shortages that prevent expanding industry, bureaucracy that is killing SMME's, "service delivery protests" (which would be called riots in most other parts of the world)...

[tec0]

Currently it appears that people demand more money and that is not the solution. My prediction is dire at the moment. We need a stronger rand... That means less will have more buying power and really that is healthy...

Right here we go possible prediction 2014 from February to May.

We will see decrease in goods export,
no new exports,
lower productivity,
a moderate decrease in power demand,
massive decrease in power production,
higher fuel cost,
higher import cost,
higher food prices,
lower quality of all foods across the board,

a decrease in disposable income that will have an impact on commercial profit.

In short job losses across the board... The only upside will be found in the repo section so if you have money now is the time to look at all those repo properties in developed arias.

But my models indicate a shitstrom

Right now there is a small light in the tunnel. Other global economies are also weakening so just maybe some companies will switch supply to South Africa but we are high risk so prozac anyone?

[wynn]

Well watching LNN with Loyiso last night, many a truth is spoken in jest, the comment that we have nothing to export but raw material which is being demanded less and less means that we have nothing else to sell to strengthen the rand and that even Botswana is doing better than us.

[ians]

Start moving back up into Africa ? I am seeing a small trend in this direction, bit nervous to say the least. After spending 20 months in Angola in a bush war and witnessing what I did, I cant see myself taking my wife and children up. Not that it is much safer at this point in time here in this country, my daughter was attacked again 2 days ago robbed at knife point at the robots in front of Macdonalds in Pinetown I am getting a little tired of my kids being bullied. They had a go at me in Pinetown at a robot a while back, one on either side of the vehicle, the one on the drivers side had what looked like a bayonet which he dropped out his sleeve, I think when they saw the 9 mm and I was ready for them they decided not to get into a gun battle with a knife...pity. The sad part is there is nothing you can do. There where too many people around for me to pick a fight.

[AndyD]

Well watching LNN with Loyiso last night, many a truth is spoken in jest, the comment that we have nothing to export but raw material which is being demanded less and less means that we have nothing else to sell to strengthen the rand and that even Botswana is doing better than us.

This has always been a problem, apart from one or two manufacturing niches that do very well but aren't enought to make even a blip in the overall numbers, we don't manufacture and export anywhere near enough. The interest rate rise along with troubled Rand could make this space more attractive though, who knows?