Should South Africans be hedging against the Rand?


2011 marked a 20-year high against the US Dollar, but that is all a distant memory now. A perfect storm- consisting of questionable national politics, a slump in emerging markets and an ongoing global commodity rout- has caused the Rand to devalue. South African investors are now looking offshore.

Why South Africa is struggling to hold on to its wealth

The SARB’s Q4:15 cash flow statistics show that for 16 consecutive quarters outflows have surpassed inflows. The last time we saw anything like this was between 1995 and 1999 when there was an emerging market crisis, as well as domestic political instability, following the 1994 elections.
A factor that has contributed massively to the Rand’s decline since 2011 is the prolonged slump in commodity prices. This has caused mine closures, a slow-down in industrial production and has contributed massively to the worsening unemployment landscape in the Republic.

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