The last time the rand tanked, as it did last week, I rushed off to my nearest liquor store with a work colleague and bought up several cases of whisky as a rand hedge. If memory serves, when we left the office the rand was trading at around R17.75 to the £ and by the time we returned it was around R20 to the £. Even when the rand settled into less volatile trading territory it proved to be a good strategy and meant that I didn't have to buy whisky for several years.
This time round I wasn't quite so fortunate because I was sitting in London watching the rand's slide with a mixture of horror and mild amusement. When I flew out of SA you needed R14.30 to buy a £ but just over a week later you needed R15.30. That meant that a bottle of Kevin Arnold's excellent Waterford sauvignon blanc set me back around R580 when I ordered it at lunch last week. Worth every penny though.
I mentioned that I met the news of the rand's slide with a mixture of horror and relief. Horror because it was a timely reminder (as if I needed one) that we are a minnow in the global economy and not even our membership of BRICS can protect us from currency volatility. Mild amusement because I suggested in a column I wrote on 31st October 2010 that it might be a good idea to move some rands into an offshore account. Here are the exact words:
The rand is surprisingly strong against the world's major trading currencies at the moment. The minister of finance seems rather keen for us to export our money and has eased exchange controls to such an extent that, for most people, they don't exist. If you felt like shipping a spare R5 mln offshore, now might be a good time to do it. You would almost certainly be able to bring it back to SA in a few years at a very attractive exchange rate. But should things start looking as dicey as I think they will you would probably wisely decide to keep it offshore.
Unfortunately I failed to follow my own advice but if you had done so you would be around 40% better off in rand terms now and easily able to afford a second bottle of that Waterford sauvignon blanc.
As the rand was heading for oblivion last week the press and social media attempted to give reasons for the slide. The PC version was that it was dollar strength rather than rand weakness that was to blame. Heaven forfend that we should dare to suggest that an incompetent government might be to blame. Other reasons were put forward but the simple and concise explanation for rand weakness is more sellers than buyers. Once you've grasped that simple concept then you are free to invent or imagine all sorts of reasons why this should be so.