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May 27 2012 11:21
There's a price war raging between South Africa's cellphone networks after Cell C lowered the rates of its prepaid calls by more than 34%.
May 28 2012 07:53
The City of Cape Town has spent R175m running the Myciti bus service since the Soccer World Cup compared to an income of R35m, a report says.
May 27 2012 13:09
The oversupply of golf estates has claimed another victim.
Johannesburg - It may be premature to speculate that the rand is recovering. However, factors are beginning to emerge which
indicate that one of the drivers responsible for the weakness in the unit last year - the record sales of R54bn in equities sold by risk-averse foreigners - may be recovering, albeit fragile and uncertain, says Brait economist Colen Garrow.
Year to date, foreigners have purchased some R15.1bn in equities. The other factor which needs close monitoring is the upcoming election, he points out.
"If the view is taken that political risk may diminish somewhat once the elections are held, and that the rating agencies may reaffirm SA's sovereign investment grade credit, once due diligence exercises have been followed on elements falling under these political and economic risk assessments, there may be a better than even chance that the rand may extend the gains it has recently posted," says Garrow.
"Admittedly, this is at odds with the compression in the high yield differentials the rand enjoys with key currencies in developed markets. But, it can be argued that even if the easier trend in monetary policy gathers momentum - as seems to be the case - investors may still be attracted to what is likely to remain a high yield. Not to mention the spinoffs of lower rates for GDP-hungry investors.
"Some comfort can also be drawn from the commodity basket of currencies the rand falls into," Garrow adds.
"Amongst the sixteen major currencies observed by Bloomberg, those associated with commodities have generally posted the strongest recoveries against the US dollar this year: NOK (+5.7%), ZAR (+4.6%), AUD (+1.6%), NZD (+0.7%) and the CAD (-1.8%). These currencies were the heaviest casualties at
the beginning of the year. Now, they are amongst the largest gainers," he notes.
Another interesting observation is that one of the worst performing currencies this year is the Swiss franc (-6.0%), indicating some reversal in the balance between the flight to quality and risk aversion.
- I-Net Bridge