The rand’s rollercoaster ride continues as the market grows increasingly anxious over domestic challenges, including government’s fiscal deficit. David Gracey, Investec's Head of FX and Fixed Income Trading, discusses the rand's performance and its future outlook.

Podcast highlights

  • Rand and policy decisions

    “Currencies at its core is about sentiment, sentiment towards a particular region or a particular country and that sentiment is built up through things like policy choices, economic activity and what your debt burden looks like.”

  • SOEs performance and the rand

    “If you take Eskom, a utility that generates energy needs to be prepared to generate energy for economic growth. When you take that energy away in the form of loadshedding because your capacity is constrained, or you've allowed power stations to deteriorate, or you haven't invested in new power generation, then - who wants to build a factory when you can't turn the lights on? Who wants to invest in a mine when you can't get the stuff out of the ground? Who wants to open a coffee shop if I can't brew coffee for my customers? So that obviously leads to GDP decline.”

  • Debt and the rand

    “Let me first start by saying government debt is not a uniquely South African problem. In fact, at very sort of simplistic measurement levels, we are far better off than many of our developed peers - like the US. The difference, of course, is that the US dollar is the global reserve currency. And so because they're the reserve currency, they're able to fund those deficits a lot easier than a country like South Africa.”

  • Elections and the rand

    “I think investors need to start thinking about the election, the potential outcomes. Of course it's too soon to forecast what that picture will look like, but I certainly think in your investment decisions - you need to start thinking about potential outcomes for the various coalitions that may form.”

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