Monthly Archives: February 2019

The Confidential Report – February 2019

The American Economy

The Federal Open Markets Committee (FOMC) in America raised rates on 19th December 2019 by 0,25% to take them to 2,5%. This is the ninth 0,25% increase in rates since rates began to rise in January 2016. This came after rates were stable at a record low of 0,25% for seven years from January 2009 – following the 2008 sub-prime crisis. The steady, gradual increase in US interest rates since the beginning of 2016 means that US Treasury Bills (T-bills) are becoming more and more attractive to investors relative to the government bonds of other countries, including South Africa. This tends to cause funds to flow out of emerging economies like ours and into first world countries. The steady rise in US rates also means that the FOMC has confidence in the strong recovery of the US economy. This has positive implications for the base and precious metals which South Africa exports. Of course, it also puts pressure on the rand – which directly impacts the fuel price and, in the medium term, the inflation rate. Read More

The Rand Barometer

The South African rand is one of the most heavily traded emerging market currencies in the world. On average more than R50bn worth of our currency changes hands every trading day. This makes our currency a favourite for international currency speculators because they know that they can take up or sell out of a large position in the rand very quickly. It also means that our currency responds very sensitively and immediately to any event among the emerging market economies – even if that event has little or nothing to do with South Africa. Read More