The rand: Where to holiday in 2014
By Brian Kantor
A recommendation to take your holidays at home, or failing that, try Indonesia, Turkey, India or Thailand in more or less that order.
South Africans, especially those with the taste for foreign holidays and the wealth to indulge this taste, will not have to be reminded that a number of the destinations they may have in mind will cost them significantly more rands than it would have done six months to a year ago.
There may be some consolation in the knowledge that while the US dollar now costs South African residents about 28% more and the euro 31% more than it did on 1 January 2013, an Australian dollar can be had for only approximately 9% and the yen a mere 5% more compared to a year ago and are now worth roughly the same number of rands they would have in June 2013. Sydney and Tokyo may still appear expensive cities for the SA visitor but not much more expensive than they were a year or six months ago.
Further consolation for the well-travelled South African with a taste for the more exotic is that some destinations have become significantly cheaper for them since June 2013, provided, and it is an important proviso, prices are set in the local currency rather than in US dollars. Bali in Indonesia will appear a mere snip, with the Indonesian Rupiah having depreciated by about 12% against the rand since 1 June 2013. That never to be forgotten experience in the Istanbul Hamam could be about 8% cheaper and booking that Rio hotel for the World Cup should not be more expensive than it was six months ago – nor should the game changing visit to the Indian Ashram take more rands than it did six months ago. Bangkok or Pukhet might also appear something of a bargain buy. Mauritius, a favourite nearby destination for SA tourists, has proved remarkably exceptional in this regard. Its rupee has maintained its value against the US dollar and the euro.
These developments on the currency markets in 2013 illustrate the important forces that have influenced the foreign exchange value of the rand over the past 12 months.
The weakness in the rand across almost all currencies, including other emerging market currencies until June 2013, was SA specific in origin. It was caused by the failure of labour relations and the resort by the unions to strike action that disrupted production and especially exports from the mines and manufacturers. It became very apparent that export revenues and profits can only benefit from a weaker rand if output can be maintained or increased in response. This was not the case in SA in 2013. For want of exports, the trade and current account deficits remained large despite slow growth. This put sustained pressure on the rand from August 2012 until June 2013.
The weakness in the rand after June was much more a case of increased emerging market risks, rather than specific SA risks. The intention of the Fed to taper its injections of cash into the US financial system, first revealed in late May 2013, meant higher interest rates in the US and everywhere else. Capital tended to flow out of emerging market equity and bond markets into developed equity markets with very negative effects on most emerging market currencies. The “fragile five” emerging economies – Brazil, India, Indonesia, South Africa and Turkey – that ran current account deficits and therefore depended more heavily on foreign capital inflows proved particularly vulnerable.
Any recovery in emerging market currencies will depend upon renewed appetite for emerging market equities that have so underperformed in US dollar terms over the past two years.
Na zbycie arubbosjącą cenę posiada Na rynku ciekawą cenę posiada eko-groszek tudzież węgiel brunatny, ktf3re wpisują się do ekologicznych opałf3w. Są ludzie, ktf3rzy spotykali się już z węglem brunatnym, wykonali sobie odpowiednie metody wypalania owego opału i są niesłychanie usatysfakcjonowani. oraz węgiel brunatny, jakie przynależą do ekologicznych opałf3w. Są tacy, ktf3rzy spotkali się już z Na rynku pociągającą cenę ma eko-groszek tudzież , jakie przynależą do ekologicznych paliw. Są ludzie, ktf3rzy mieli do czynienia już z opracowali sobie właściwe metody palenia niniejszego opału oraz są bardzo zaspokojeni., eksploatowali sobie adekwatne metody spalania owego opału oraz są nader zadowoleni.