1 USD = 19.1009 ZAR. Jan 11, 2025
Some mixed news reports, but generally negative reading and very few positives for the South African Rand. The Rand is down 7% this month and the signs are not looking good as once you breach the R20 to the dollar things will tend to drift quite quickly.
It is hard to factor in currency depreciation when you are living and earning that currency. Back in 2013 when I was travelling around the states the Rand was at 10 to 1 so it has nearly halved in value in the last 12 years. A proper waning sign as the last thing anyone wants is to be trapped in a country due to a weakened currency. This is going to be the fate of many and it is so obvious to see what is coming. Imagine not being able to afford to travel and that is the fate for over 90% of the country already.
The problem is that all imports are calculated in dollars so everything imported now has an added 7% extra cost. When you consider South Africa has no operational refineries this means that petrol and diesel prices are directly affected. Airfares will rise as aviation fuel is also directly imported so flight prices will rise again.
Having a currency on the steady decline means investors are also wary as any investment is constantly being diluted. The SA economy is not in great shakes with unemployment at an all time high above 50% so this is not good news. Exporters may benefit due to a weaker Rand but SA imports more than they export.
The one worry is SA joined BRICS and with Trump a week away from taking control of the US the Dollar could strengthen even more. R20 to $1 will happen fairly quickly and could we see R25 to $1 by December this year?
Seeing all this negativity around the local currency is worrying, but at least I have external investment in crypto valued against the dollar. This year the plan is to have funds offshore far from the safety of the local economy. Over the next 5 years I will need to move away from relying on revenue generated within SA as lets be honest it will be worth very little come 2030. Once the slide starts it will not be reversed and can see a R30 to $1 in he future.
Trade wars could be the next big story with SA as they have sided with BRICS and like I stated are a net importer so they need export trade deals. The government is rater headless these days and the worry is once the unemployment deteriorates even more which it surely will with open borders then here will be no recovery.
The biggest problem is the government who are spending everyone's futures with the deals they are doing owing money on every deal they do. At some point the country will pay for the debt they have racked up being reliant on China and Russia for their own economic survival. I would guess we are most likely there already and now need a miracle.