the ZAR

[_nova]

is being decimated, annihilated, buttreamed, properly, and well deserved I'm sorry to say

[#2]

and ultimately good for a developing economy like ours. We were too darned expensive before.

[_nova]

yep, it's about the only hedge against dropping commodity prices. But it only benefits the gov and big corporates. The rest of us gonna feel the pain. Here comes mega inflation bru

[SimonPB]

I dunno, look at the zar chart post 9/11. Massive blow off followed by slow grind back.

[louisg]

When the panic stops, those that are buying the $ will start to SELL the $. It just may take some time.

[grandmaster]

Simon,different scenario this time around.

[_nova]

Simon, post 911 the economic fundamentals were quite the opposite from what we now have hence the quick recovery. Today we have a punch drunk consumer and a crash in commodity prices. We'll grind back but it will be slow and hard. The other worry is how the ZAR is weakening against just about every other currency thanks to our gov's sublime exposure to imported credit. The problem, like louisg states is when the USD suddenly realises it's only worth the paper it's printed on, somewhere in 6 to 12 months from now. That's when things are going to get really interesting in the FX market. But, at the moment? Go long the USD against about any other currency except the JPY. It's like shooting fish in a barrel :-)

[#8]

I am not a currency specialist, but those in the know, it is expensive to short the rand, the situation wont be very long lived. Even though, the rand is falling sharply, the rand price of commodity prices have not blown. So it does not make sense that a MC Donald happy meal will be in the ZAR 30 price in S.A, but ZAR 70 price in the UK. It is common sense, the rand will pull back.

[#9]

I attended a lecture by Cees Bruggemans from FNB the last time the rand behaved like this (actually it was just after it strengthened to R6 to the $). His message at the time was that there was no economic model that could be used to give any indication of what was a fair value for the rand. It could swing wildly in any direction

[SimonPB]

I never believe the "it's different this time" theory. That's the logic they used to justify the dot.com bubble. reality is cycles and emotions - and they always the same.

[_nova]

I never said it's different this time. Read again Simon boyo. In fact, you're right, it is a cycle and the best way to estimate it's impact is to find historical precedence, and unfortunately you'll find that precedence in the period prior to, during and post 1929. Hoover and FDR (contrary to popular opinion) did exactly the same things that have been done today, they also propped up banks in a credit bubble. They didn't sit back and do nothing as some pundits postulate. They nationalised left right and centre and the end result was a depression and a 'New Deal'. The crash did not beget the depression, it was the negative equity, credit, and a very punch drunk consumer who folded and brought the economy and liquidity to a standstill. Like today? The LIBOR is much better and the markets are 'thawing' but there's no borrowing or lending happening... yet, and there's the rub that will become the real itch if the worse case scenario plays out.

[SimonPB]

nova, I always think simple. So here's how I see it. One day a week/month/year/decade/century from now people will want to own SA assets because they like the risk/reward ratio. In order to do that they will have to buy rands, rand will strengthen. The last time the rand strengthened was because foreigners went on a massive SA buying spree - that'll happen again. Now if this happens in 2108 then it is all pointless, coz we'll be dead. But if it happens in say 2010 then the rand will strengthen. So the real Q is when do you think foreigners will start buying our assets again? An my other thort is even more simple, nothing ever goes only one way, even Zim inflation will reverse one day.