There was once a clear link between record gold prices and a rand that was worth more than the dollar. Until we fix our power and rail crisis, however, that’s unlikely to happen again
In early 1980 the rand reached a peak of 1.32/$; yes, the rand was actually stronger than the dollar! At the time, the gold price had surged to $820 an ounce after Russia invaded Afghanistan and World War 3 looked like a real possibility. It was an incredible move higher considering that the gold price had been just $35 an ounce a decade before.
Gold mining was hugely lucrative for shareholders in the gold mines — and for the South African government, which collected much extra revenue from taxes and royalties paid by the gold mines.South Africa is now the eighth- largest producer of gold in the world, producing about a sixth of the gold that it delivered in 1970. The link between the gold price and the exchange rate is now correspondingly weak and has done little to save us from facing the lowest exchange rate on record.
As an emerging market, South African risk generally follows the average emerging-market risk quite closely, but South Africa-specific risk has recently risen dramatically in the face of income-destroying load-shedding, and more recently from the reputation-destroyingSeen another way, the ratio of the rand/$ exchange rate to the emerging market/$ average provides a useful indicator of local risk. This ratio indicates that South Africa is again in economic crisis territory.
It means we are probably saddled — for now — with a weak rand and a near-term uptick in inflation. Yet the weaker rand is not an unmitigated disaster. Exporters and firms competing with more expensive imports will benefit from higher rand prices received for their output. This window of extra profitability will be supportive of extra output, incomes and employment.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
NHI needs to be shelved until clean water can be provided | The Citizen💧💊 OPINION: Paying forHealthcare shouldn't be the problem when basic needs aren't met. It's time to prioritise CleanWater and essential services 🚰 💪 NHI Read more on TheCitizenNews ⤵️
Read more »
Battle-hardened Munster hail Red ArmyGraham Rowntree paid tribute to the Red Army after Munster rewarded their travelling fans by winning the 2022-23 Vodacom United Rugby Championship in Cape Town on Saturday.
Read more »
John Dobson concedes 'Munster thoroughly deserved URC final win' | The CitizenMunster coach Graham Rowntree was extremely emotional after the game and admitted that they had done it for the Province of Munster.
Read more »
Munster coach 'immensely proud' after upsetting Stormers: 'It's a huge moment for the club' | SportMunster coach Graham Rowntree lauded the character of his players after they upset the Stormers 19-14 in the URC Grand Final in Cape Town on Saturday night. | Sport24news
Read more »
WATCH | Student nurses at Baragwanath vow to continue protests over non-funding of 167 colleagues | News24Nursing students at the Chris Hani Baragwanath Nursing College vowed to continue with their protests until the health department meets their demands. | RealAlfonso12
Read more »