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