Ask any business owner, âwe donât mind a weaker currency, we just want a stable oneâ. As quotes on imports and exports are near impossible, when swings range from 2 to 8 percent. And just ask the oil traders who are coupling the exchange rate volatility with a volatile oil price. It’s near impossible to plan. Britain leaving the European Union has only exacerbated this effect, and despite offering some assurances on Friday around the financial sector, given itâs resilience during the 2009 global financial crisis, South African Finance Minister Pravin Gordhan says itâs raising uncertainty for business. Tougher as the South African Rand is seen as the emerging markets most volatile currency at present. Another obstacle an already ailing economy has to deal with. â Stuart Lowman
By Jeanette Chabalala
Johannesburg â Finance Minister Pravin Gordhan said following the result of the Brexit referendum, in which 52% of Britons voted to leave the European Union, developing countries, including South Africa, were experiencing volatility in business.
In an interview with Power FM on Sunday, Gordhan said the jumping around in the currency was raising uncertainty for business.
On Monday at 7:00, the rand was down by 4.65% at R15.25 against the dollar and 3.6% up against the ailing pound at R20.44. Jumps in the rand/dollar exchange rate on Friday swung from 2% to 8.5%.
The pound – at a 31 year low – slipped another 2% to $1.3403 as of 12:58 Tokyo time, extending Fridayâs 8.1% plunge, Bloomberg said.
South Africa is seen as one of the most volatile emerging markets currently and its currency swings are hard to predict.
âThe currency was uncertain for business if you are importing or exporting,” said Gordhan. “If you are exporting you would have a slight advantage when the currency depreciates and if you are importing, it increases the cost of imports,â he said.
Finance Minister Pravin Gordhan says it will take 2 years for SA to conclude new trade agreements with the UK following the Brexit vote.
— SAfm news (@SAfmnews) June 24, 2016
“We are importing wheat as a result of the drought and this pushes up the cost of wheat,” he said.
âThroughout the world at the moment they have a reluctance [in] part of business to invest. Demand has dropped across the world including South Africa as well,” he said.
He said this week, the monitoring of processes and events related to the Brexit would continue.
âWe need to see how the next week goes, the Reserve Bank… is monitoring the situation carefully.
âThe middle eastern markets were open today [Sunday] and they were already showing further decline in trading in those markets so we donât know what is going to happen tomorrow morning. We attract investments from the UK, Germany and other European countries and we donât want this uncertainty to impact on investments,â he said.
#Brexit Gordhan says labour, business, government and labour must continue to reignite our economy.
— KhayelihleKhumalo (@KhayaJames) June 24, 2016
British Prime Minister David Cameron announced his intention to resign earlier on Friday, while the pound fell to record lows.
Cameron said he would resign by October and insisted that the British people must be respected after voters chose to leave the 28-nation European Union.
He said there could be no doubt about the result of Thursday’s historic vote, but that he was not the “captain” that would steer the ship through difficult negotiations with the EU.
Cameron said: “I am honoured to have been prime minister of this country for six years.” – News 24
Source: http://www.fin24.com/Economy/businesses-are-experiencing-uncertainty-gordhan-20160627