Current account deficit

[boing]

Can anyone explain the impact of this on our economy and the rand. Especially if the deficit continues to increase.

[Preston]

Current account decifit mean the net inflow of foreign currencies is less than our currency. Continual increase will result in weakening of the rand.

[SimonPB]

and it is ecpected to continue to increase with dividend out flows (foriegners been big buyers), and because of capex spend (like the 202 spoornet locomotives).

[#4]

Preston, what do you mean by "net inflow of foreign currencies is less than our currency".

[SimonPB]

more money out then in

[john_1]

Hey Simon ask those smart boys behind you what the latest foreighn holding on the jse is these days as a %

[SimonPB]

about 35%

[john_1]

Nah! it was over 50% at the investor outlook presentation.

[SimonPB]

hmmm, wonder were I got 35? Well then slightly higher then from the presentation as they have been net buyers since.

[john_1]

Note the part about.. ask the smart guys!

[topgun]

What this boils down to is that SA is effectively selling the family silver (Edcon, stakes in ABSA, SBK and foreign portfolio flows) over time to fund its consumption expediture. Fact is, we are generating a huge c/a deficit in a booming world economy and selling as much platinum, coal, manganese etc. as we can produce and export at all-time high prices. The capital imports (Eskom, Transnet etc.) have yet to come - now juxtapose this position with a possible cooling off of the global economy and hence lower commodity prices. Should the latter scenario even partly come into play, the consequences might be severe for both the Rand and CPIX, and hence interest rates. SA might then be forced to severely curtail its commitments ito its planned infrastructure rollout. Many dangers lurk over the horison!!

[john_1]

true about the silver, I have made a point of meeting and talking to as many fund managers as possible and in the last 3 years I am yet to meet an all out bull.

[SimonPB]

lol, I was playing at being smart. Back to the drawing board it seems.