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Many people believe that a weak rand will promote exports, but the historical evidence is that all that happens is that inflation increases, which prompts the central bank to raise interest rates, so "killing" the domestic economy, which is at least twice as large as the export sector.
If one uses US dollar values to measure export performance, then the record monthly export value was a record $5bn in December 2004, when the rand averaged R5.73/$ compared with a monthly average of R11.55/$ in December 2001, when exports only amounted to $1.9bn.
In 2002, when the rand averaged R10.52/$, full year exports only amounted to $30.995bn, while in the first seven months of this year exports already amount to $29.724bn, thanks in part due to the record mineral sales values.
On a rand basis, the value of mineral sales sold surged to a 16.2% year-on-year (y/y) increase in the second quarter 2005, after only a 3.9% y/y rise in the first quarter.
The second quarter surge was due to booming sales of non-gold minerals to China and the US, as non-gold mineral sales bounded up by 24.7% y/y, while gold sales dropped by 10.3% y/y.
Gold only accounted for 21.1% of total mineral sales in July 2005 and is likely to drop below 20% in August 2005, when the gold mining industry suffered its first industry-wide strike since 1987.
