Yes, the rand has been left behind! It has lost the race with the Rand trading R10.83 to the Dollar and R18.13 to the British Pound. This is not the time to be going overseas for a shopping or even sightseeing holiday, this might the time to go overseas on a camping holiday.
Is it too late to go offshore with savings? Many investors are asking. November 2012 I blogged about the Rand depreciating for the next ten years, sadly I was right about the Rand deprecating. Sadly, because a weak currency means lean times for South Africa as all our imports increase. Oil, textiles, electronics (to name but a few) are imported in South Africa. As these goods increase, inflation increases. As inflation increases, interest rates increase, our bond repayments increase and the cycle continues. Fortunately the South African Reserve bank monitors this closely to prevent this cycle.
Some economists argue that we lag four years behind European growth and with Europe looking to have turned the corner, South African’s economy might strengthen and the rand appreciate. If this is the case the currency will take four years and not ten to strengthen.
Whether it takes four or ten years to recover, it is not too late to invest offshore. Most investment companies have unit trusts, exposed to the offshore markets and it is a very simple process for you the investor, to be exposed to this market.
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