It's enough to make you sick.
Because that, my friend, is not the price of a loaf of bread these days.
Or even the cost of a litre of petrol.
It's how much you would have to cough up to buy a single dollar on Monday morning.
Shocked? I was too, when three days ago the ZAR touched its worst level ever!
And the awful reality is, it's not about to rally back to R14.00/$ anytime soon.
“Five defensive penny stock plays that could make you richer despite the Corona Crisis!” writes Francois Joubert
1. You could pocket up to 30% from this ‘sure thing’ amidst market chaos
2. A coal miner is keeping the lights on during the corona crisis and is profiting big time!
3. A buyout is imminent – if you act quickly you could make a sweet 60% in gains
4. This transport company is booming thanks to the lockdown
5. An opportunity to make as much as 70% with the high gold price right now
Two reasons why the rand’s slump is far from over
1. COVID-19 has caused a steep selloff of emerging markets: The COVID-19 pandemic has hit the world, not just South Africa, hard. It’s caused a huge market selloff as investors run away from risky assets such as emerging market currencies in favour of safe-haven assets.
2. Rating agencies have lost their faith in us: On Friday 27 March, rating agency Moodys’ downgraded South Africa to junk status. Fitch followed suit a week later when it adjusted its assessment of the country from BB+ to BB, with a negative outlook. That means South African bonds will be kicked out of the World Government Bond Index likely at the end of this month. Once that happens, index funds like bond ETFs will have to sell our bonds and that, in turn, will likely mean even more selling for the rand.
All in all, things look pretty bad for the rand right now.
But the good news is nothing goes up or down in a straight line. I believe the rand will strengthen before its ultimate collapse. And while we probably won’t see it return to recent values of R14.00 to the dollar, I expect it to return to between R15.00 and R17.00 to the dollar in the short-term.
And when it does, you’ll want to be ready.
Do this today so you’re ready to pull the trigger
How long will it take the rand to get there? Truthfully speaking, that’s anyone’s guess. It could be next week. It could be next month. It had already recovered to R18.11 as I submitted this article to the Money Morning publishers.
But there is one thing I do know. You can’t delay when the short-term recovery happens.
If you want to transfer assets into a hard currency, you must have your ducks in a row so that you can press the “go” button once the rand starts to strengthen again.
But be warned. Do NOT use your local bank.
If you truly want to do this correctly, you NEED do this through a treasury agent.
Retail banks are notorious for giving the worst exchange rates with spreads of up to 4%. A treasury agent, like Rand Swiss on the other hand, will give you a spread as tight as 1%! And trust me that 3% makes a HUGE difference!
Say, for example, you externalise your nest egg and send R1 million offshore. The spread between a bank and a treasury agent could be the difference between paying R40,000 in fees and paying R10,000 in fees.
That’s a R30,000 saving!
Plus, if you don’t know where to send your money, a treasury agent can help you open a local US Dollar account to store the funds while you figure out where to invest. It can also open an offshore stockbroking account for you and send the funds there for storage. Or, it can help you make use of the account to buy shares during this current black Friday sale on global markets. No bank will do that for you!
There really is no time to waste.
If you don’t have a treasury agent yet, give us a shout and we’ll help you open your account so that you’re ready when the rand strengthens. Simply call us on 011 781 4454 or send us a mail on email@example.com
and let’s help you to get the ball rolling.
Rand Swiss, Wealth Manager