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Online Share Trading

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Hedging the rand
SimonPB
Valued Contributor
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rand.jpg

 

With the Rand getting all hot and bothered again after a protracted run stronger I thought a quick look at how we can hedge against a weaker currency.

 

  • Offshore but locally listed stocks
    • Works well but a lot of moving parts that may offset or enhance the share price

 

  • Local USD earning stocks
    • Again, works well but many moving parts so not linear between price and currency

 

  • Webtrader offshore account
    • Money in a Webtrader account is USD so this is purest form of rand hedge

 

  • Locally listed offshore ETFs & ETNs
    • We have a wide range here with the CoreShares and DB x-trackers. Here again the underlying basket may

 

  • NEWUSD
    • ETN from ABSA, simple and tracks currency 1:1 (Also GBP and Euro)

 

  • Commodity ETFs/ETNs
    • Two moving parts and the commodity USD price may move against you

 

  • Currency futures
    • Traded in a futures account, nice and easy and geared modestly.

 

The easiest and simplest is a position in NEWUSD while the purest would be an offshore webtrader account with currency futures offering some gearing.

 

Perhaps most importantly, never panic.

Simon

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