Weakening Rand drives import prices low

The weakening of the South African Rand (ZAR) in recent days is expected to see local importers enjoying great business deals from South Africa.

The South African currency suffered a setback last week as investors in that country were reportedly fleeing riskier assets following the rapid spread of coronavirus, a deadly virus which has killed thousands and continues to spread across the world after it was first discovered in China.

While the South African currency performance is driven by macro factors, its latest slump against the US Dollar along with other emerging markets is linked to increasing cases of the Coronavirus which has since been named COVID-19.

Speaking to Voice Money this week, a renowned economist and also former Bank of Botswana Deputy Governor, Dr Keith Jefferis said the weakening of the ZAR means the Pula effectively strengthens against the South African currency but weakens against the USD.

“To that extent, it gets cheaper to import from South Africa and also gets a bit expensive for those who sell their goods to South Africa,” said Jefferis, a Managing Director at Econsult firm.

Jefferis emphasized that the impact will vary depending on what goods are traded between the two countries.

This week, the Pula was equivalent to R1.39646 and experts say this will work in favour of those who source goods from SA.


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