Rand crashes through R18/$, but won’t affect petrol price – Economist

The Rand has crashed through the R18/$ mark while the British Pound has hit a record low.

Speaking to The Citizen, Economist Dawie Roodt said the Dollar is currently extremely volatile.

Rand/Dollar

“This is not a Rand story, but it’s mostly a dollar story. So, what we are seeing is that the American Dollar is rising, it’s going up against everything else and in the process everything else is going down against the US Dollar.

“So, it’s mainly the US Dollars strength that we are currently seeing. We are seeing that for a number or reasons, but a very important reason is simply because the Americans have been increasing interest rates quite aggressively and when they increase rates, the Dollar will go up and other things will go down,” Roodt said.

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Roodt added that financial markets across the globe are under tremendous pressure.

“So, investors are spooked, they are scared and they run to a place where they feel safe and the US Dollar is always a safe haven.”

Petrol price

Roodt said the Rand/Dollar exchange is unlikely to affect the petrol price.

“As the dollar goes up, commodity prices also go down including the oil price. So, there are two forces pulling in opposite directions. The one is the lower oil price and the other is the weaker Rand. I’ve got a suspicion that we are going to see another fall in the petrol price despite the weakness in the Rand.”

At the time of publication, the Rand was trading at R17.97 to the Dollar, R19.23 to the Pound and R17.42 to the Euro.

South Africa’s outlook

Meanwhile, despite tough global economic times, South Africa has baffled critics by earning the BBB long-term and B+ short-term rating, with a stable outlook – an average investment grade and an outlook regarded as stable for both the short- and medium-term.

According to the latest rating by Sovereign Africa Ratings (SAR), BBB represented the country’s adequate repayment capacity in terms of its ability to meet its debt obligations.

SAR said the SA sovereign rating was “underpinned by resilient macroeconomic and non-economic fundamentals”.

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