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Weaker Rand? COSATU call R10/$

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DEP
Super Contributor
COSATU CAlls for R10/$. "We are on a completely disastrous path ... We need a change. We need an exchange rate that will go back to 10 (against the dollar) for South Africa's manufacturing sector to be given another breath of fresh air," COSATU general secretary Zwelinzima Vavi told reporters.
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48 REPLIES 48
Fredsed
Super Contributor
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DEP
Super Contributor
Buying some BTI... just in case.
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striker
Super Contributor
The likes of Cosatu ,SACP and ANCYL,do alot of chirping from the gallery,most of it hogwash.However the call for a weaker Rand is valid.Thousands of jobs are been lost across all sectors,due to the Rand's strength, squeezing margins of all exporters.
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AJT
Super Contributor
What we need is a stable currency so that importers and exporters can plan. A strong currency forces a country to become more efficient...
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SimonPB
Valued Contributor
err what about the thousands of jobs being saved or created by imports ?? everybody thinks we must worry about a weaker rand to essentially help the miners, why ??
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DEP
Super Contributor
Hmmm, why does China favour a weaker Yuan? The US hates this policy because it favours China's exports. No country has done well on strong currency. Hey, R10/$ will be great for the JSE.
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topgun
Super Contributor
Yep, I fully agree. The more we import, the more jobs we save and create. I say close down the mines, we don't need them in any event. That is the way to build a prosperous country...the Chinese have it all wrong. Pity about the unsustainable BoP deficit and debt accumulated along the way though?
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DEP
Super Contributor
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SimonPB
Valued Contributor
hey dude, if teh mines are what is goign to save this country - then it is already game over .. thing is we get caught in a thinking pattern and we never question it .. the current thinking pattern is that strong rand(currency) is bad .. I am not convinced .. I have a friend who imports christmas decorations, his 2009 orders are some 30% up on 2008 because he was able to drop prices some 25% .. and as a result, he has employed more staff ..
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striker
Super Contributor
Simon please explain how we save and create jobs through the importing of goods.I'm totally baffled by that statement. Further,without a mining sector this country has little else to offer.
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SimonPB
Valued Contributor
you ever heard of something called retail spending ?? drives the US economy for the last couple of decades .. but my point is larger, if it is the mines that stands between us an doom - we are doomed, they have been in a tail spin (in every sense) since the 80's .. address that point ..
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SKALA
Super Contributor
Weak ZAR = higher fuel costs, higher food prices, higher salaries for the already overpaid top officials (in gov and private sector)and thus even higer tax for me. ZAR = 4USD is what I say. Long for the days 1ZAR = 1USD.
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richardw
Super Contributor
Besides, China can defend their currency because they're big enough. SA would get taken to the cleaners trying, especially if we tried every time it went the wrong way. The problem isn't (only) the Rand, it's the dollar because the value of the dollar is dropping. We can't peg sustainably to a falling dollar.
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Fredsed
Super Contributor
Inflation is back within target range. One million jobs lost in SA this year. Interest rates are attracting carry trade profiteers pushing the Rand stronger and pushing SA towards civil unrest. Interest rate cut of 1% imminent.
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SKALA
Super Contributor
Haai boet, the gold mines are working museum pieces. RSA and southern africa should be producing food for the world, not begging for food. Food production should be southern africa's focus. The land is not for sqatting and sub-sistance attempted farming.
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topgun
Super Contributor
The point is not that SA needs a so-called weak currency or necessarily one at R10/US$ but one that reflects its operational realities ie. the pressures on the domestic cost base caused by such factors as escalating electricity and other administered prices, regulated wage increases and the rising security costs faced by miners to combat theft and pilfering. In other developing countries, the relevant authorities have some idea of the sort of band in which their currency should trade. SA's one-dimensional monetary approach to only target CPI without considering economic growth, the external value of the Rand or employment creation played its role in anaemic job growth throughout the previous economic upcycle. The present trend to escalate welfare payments and social grants is wholly unsustainable. Currency support when it is weak and falls below that target band is near impossible in the real world, especially a fairly liquid emergency market currency such as SA's. However, some degree of monetary intervention via the purchase of foreign assets/currencies to bolster foreign exchange reserves once the currency strengthens beyond that band as may be the case now might indeed be smart. When the currency is so distorted by the carry trade and capital inflows, large sections of our mining reserves are rendered obsolete owing to these domestic cost factors. These features are also present in the country's ongoing de-industrialisation. I also fail to see how the SA economy can possibly sustain any degree of recovery under these circumstances. Besides, where will the tax revenues come from to underpin govt. profligacy and sustain capital spending? Foreign debt?
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striker
Super Contributor
Simon;- to compare our economy to the US is totally unrealistic. Inspite of the fact that the US has a vast and mature manufacturing industry, with high productivity levels, they are under strain because of cheaper Chinese labour, and thousands of american jobs have been lost as a result. The retail spending you espouse as a solution, has got the US into a sorry financial state, and they believe you can simply print more money and throw it at the economy. Surely the cornerstone of a healthy economy, like China's, is a vibrant manufacturing sector that exports more than they import and part of the Chinese model is to keep their currency weak. Retail spending will simply not happen without people being employed and the best chance S.A.'s vast unskilled masses finding work must surely be in the Mining Sector. Where do you propose that these masses will find work, if the Mining Industry were allowed to collapse? The bulk of S.A.'s non-mining sector is simply uncompetitive, and far too underdeveloped to provide employment to such masses. The benefits of a weaker currency will far outstrip, the downside of the equation in higher fuel prices and so on.
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striker
Super Contributor
Oh and lastly - without a mining sector there would hardly be a viable stock market anymore,and the JSE and SBK'sOST might not survive.You ought to address that outcome.
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SKALA
Super Contributor
You people are not reading my message; WE MUST PRODUCE FOOD!! The land in southern africa should be producing large quantities of food. But for that I suppose we need white farmers and where are they; either killed by subvesive agents or farming in a more user friendly place.
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