In this week’s Currency Focus podcast with Jackie Cameron, Andre Cilliers– currency strategist at TreasuryONE— highlights the advantages of overseas diversity. He shares how information from around the globe play into measuring the worth of the rand and detects current volatility, with the South African currency dipping listed below R14 to the United States dollar. According to the currency specialist, it’s still a fun time to benefit from the rand’s strength relative to significant currencies.
Andre Cilliers on what’s occurring with the rand:
We have actually seen it dipping once again and if you take a look at what’s truly occurring then it’s a story of the dollar weakening. The euro has actually exceeded the 122 levels and breaking the 122 level was rather substantial. And the next target level is really now rising into the 123 s, and so on, which suggests that there might still be some additional gains on the rand if that in fact occurs. We have the Federal Reserve conference minutes coming out and after that we’ll see what was talked about and what was the sensation of individuals within the conference and likewise how they look moving forward and their view on moving forward.
On the crucial figures he utilizes to examine the rand:
There are different figures. If I return to the 80 s, the name of the video game was taking a look at the trade balance. And you go to October 1987 and markets toppled and stock market toppled due to the fact that the trade balance figure of America exceeded 17 billion, which today is really a drop in the container. There’s particular things over the years that comes to the leading edge and that ends up being crucial. Now, if you go to 2020 and you take a look at the pandemic, then the pandemic and the figures surrounding the pandemic and the effect of the pandemic had actually ended up being essential. And the one location that everyone takes a look at this moment in time is the American economy and how that will grow and how development worldwide will spin off from that development and likewise the development out of China. Inflation figures, rate of interest, retail sales, any financial determine of America at this moment in time, that offers you an indicator of what the development might be and where the development will be going is necessary and the effect of that development on the remainder of the world and ultimately then likewise South Africa.
On the function that China bets SA’s figures:
Well, the Chinese projection is incredibly essential and the figures coming out of China is incredibly crucial. We should keep in mind that China is among our most significant trading partners. There’s a great deal of trade being finished with China. There’s a great deal of product exports. There’s a great deal of other imports out of China into South Africa. All of us understand if you enter into the store and you purchase something, it states ‘made in China’. A little misstep in China triggers influenza in South Africa since of the huge trade figures and the trade amounts that we have with them. You have to look at the Chinese figures extremely, really significantly. What takes place in China, as I stated, affects us.
So if China and America begins entering into a trade war, and we understand about all those trade war conversations over the four-year duration that Mr Donald Trump was in power– it’s now sort of gone away with Mr Biden– however the stress are still there. Stress in between China and America– American sanctions of any kind, you understand, guidelines of any kind on China– anything that affects on China, effects on South Africa. They’re the 2nd most significant economy worldwide. What occurs there is crucial for us, not only simply since of our trade figures, however due to the fact that of the effect of the Chinese economy on the rest of the world.
On Europe’s effect:
When once again– retail sales, the effect of their quantitative reducing program, the level of their rate of interest, how they come out of the pandemic, how development figures are taking place in the European economy. Every little piece of financial information coming out of Europe is crucial for us. They are likewise a really essential trade equivalent of South Africa, and a great deal of trade is being made with them. As soon as again, actually every piece of financial information that you can get, every little piece of details that some political leader drops, or a little bomb that they drop, or a protest that they make about something, is essential to us.
On the European side, due to the fact that of our trade with them, they are extremely, really rigorous on their trade. If I believe in regards to our citrus exports to Europe, for example, in Europe, they have something called the restricting of importing black area. Now, black area is a small, small, small little area on a fruit that you get in particular parts of South Africa. Now, if there’s a specific quantity of strikes in the European Union on getting any imports of fruit from South Africa with a black area on it, then they close their markets off.
Particular markets are being enjoyed by us and took a look at. It assists that we have actually got a great deal of consumers through different markets and in our interaction with them, we’re likewise, apart from our own analysis and our own info, we likewise get details from our own customers in how they view markets to be prices, whether the marketplace is increasing, whether the marketplace is slowing, costs increasing, and so on. A lot of details goes into the analysis of choosing what we in fact believe and where things can go.
On Australia and how it plays into the rand:
Australia is likewise commodity-rich and likewise a product exporter. If you have product rates going up and South Africa doing well out of products, then clearly Australia would likewise do well. And if there’s a misstep in Australia since of something that occurs in China, then there will be a misstep in South Africa. And after that there might be a misstep in between us and Australia. And we have actually seen lots of organizations out of South Africa opening workplaces in Australia. And certainly there’s been a great deal of trade in between us and them, not as much as with China, not as much as with Europe, however there is trade in between us. And if there’s trade in between South Africa and a nation, then it is necessary to enjoy those figures and to enjoy what takes place because nation since it affects the trade referral and trade figures.
On whether it’s a great concept to invest overseas (and where to invest from a currency viewpoint):
It’s constantly a good idea to buy other nations. It’s constantly an advantage to take a look at different alternatives, to invest your cash into numerous locations and diversify your financial investment portfolio. At this moment in time, with the rand being relatively strong and trading at really strong levels, it’s a very great time to really take a look at increasing the speed at which you invest offshore and possibly do a bit more than what you would typically do and get a bit of a larger foot into the door of overseas financial investments.
I believe America is among the nations that reveals the much better development figures if you take a look at very first world nations. America and their rate of interest is at least still somewhat favorable. Europe will take a bit longer to come out of the pandemic and get their development figures back. I likewise believe that Australia, with greater yields and likewise being a commodity-rich nation, provides everyone with pretty good chances.
Associated short articles:
- Rand enhances: What’s next? Thorough insights from currency strategist Andre Cilliers of TreasuryONE
- Anticipate the rand to remain more powerful, for longer– TreasuryONE currency strategist Andre Cilliers
- A more powerful rand provides chances for overseas financiers
- Offshore financial investment recommendations: Magnus Heystek exposes how consultants are damned in SA
- Just how much should you invest offshore?
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