The Rand currently trades at pre-pandemic levels confusing many who expect it to continually weaken. But there are multiple drivers of Rand strength that could see a number of years of a stronger currency as we’ve seen before.
Certainly, we’ve seen this before, from December 2001 – January 2005 the Rand improve from almost 14.00 to under 6.00.
In this Power Hour presentation, Simon Brown from Just One Lap looks at what is pushing Rand strength. How long can it last? How strong can it go?
The short answer is to watch commodities, the higher prices mean higher exports which means a positive trade balance. Inflation differences and foreign buying/selling of local equity and It helps to think of bonds as an IOU from the government. When you buy a fixed interest rate bond or bond ETF, you are lending money to the government in return for a fixed interest rate (also called a coupon) over time. You can invest in local and foreign government bonds. This post covers the subject in more detail: ETF: also impact the currency, but for now it is all about those commodity prices.