close menu

The Rand the Pound, the Boks and the English

by Andrew Rissik | Aug 21, 2015
  • For South Africans, investing and spending time in Britain has become more expensive than ever before. This could not have come at a worse time for the rugby fans amongst us. Travelling to support our Boks on British soil at R20.20 to the Pound will bring a tear to many an eye.
    cape-town-the-magnificent---copy
    Many South Africans have a deep attraction to the UK, most probably stimulated by the brief period beginning in 1994 when South Africans under 27 became eligible for a two year working holiday visa. As a result, the GBP is arguably the most watched by many in South Africa despite the fact that the USD and EUR are traded more regularly with the Rand.

    Following the Rand’s rapid depreciation everything British has become seriously expensive and, for most, simply unaffordable. In theory, Rand weakness is a gift that should stimulate exports, however this is impossible due to militant and unproductive labour as well as frequent and unplanned power cuts. Our finance ministry finds itself with its back to the wall as business confidence is set to be further damaged by the continuing slide of the Rand. Imported inflation compounds this problem, further slowing the stuttering economy.

    Currently, the net sellers of SA Government Bonds and South African Equities are foreigners, adding further downward pressure to the value of the Rand. South Africa is also not deemed a secure environment for long term capital investment so manufacturing, which in the medium term needs to increase, will most likely remain stagnant.

    The Rand will experience further downward pressure due to economic conditions in China. The fallout from the commodity crash is resulting in large scale job shedding in the mining industry. On top of this, there is widespread pessimism as a result of corruption in government at all levels, the trade deficit and government spending more than it receives in taxes. Many economists predict a pending ratings downgrade which will further add to the Rands slide as emerging markets become less attractive.
     
    The SARB is going to have to raise interest rates which will be deeply unpopular as most households are facing already strained credit scenarios. 

    Unless Government takes the bull by the horns and stands up, not only talking a good story but delivering on promises, Sable is of the opinion that the downward trend is here for the foreseeable future.

    Watching the Boks on British soil in 2015 is going to be a very expensive experience for anyone using their hard earned Rands. However, it’s never too late and if you haven’t already, it may be prudent to start using your annual offshore capital allowance for foreign investment purposes to start building an offshore portfolio. By 2020 you may just have made your next Rugby World Cup trip much more affordable. Who knows, the Boks might even be favorites to win then too?

    To find out how our wealth team can help you move your funds abroad and how we can assist you in building a UK based portfolio, contact us on +44 (0) 20 7759 7554 or forex@sableinternational.com.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

     
     

    South Africa

    Cape Town

    Regent Square
    Doncaster Road
    Kenilworth 7708 +27 (0) 21 657 2120

    Durban

    201 The Annex
    Ridgeside Office Park
    Umhlanga +27 (0) 31 536 8843

    United Kingdom

    London

    Castlewood House
    77/91 New Oxford Street
    WC1A 1DG +44 (0) 20 7759 7514

    Croydon

    5-7 Selsdon Road
    South Croydon
    CR2 6PU +44 (0) 20 7759 7581

    Australia

    Melbourne

    9 Yarra Street
    South Yarra
    VIC 3141 +613 (0) 8651 4500

    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services License issued by ASIC to deal in foreign exchange (1st Contact Group - AFS License number 335 126).

    This site uses cookies, read more or close this notice.