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CURRENCY CAPER:

22nd November 2019

By: Martin Creamer

Creamer Media Editor

     

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Paying for operating costs in weak currency and receiving payment for the product the operation produces in hard currency can have major financial benefits. For example, the current gold price is attractive in US dollars but even more so in South African rands. Or, to put it another way, gold priced at $1 500/oz is agreeable, but gold at R700 000/kg is even more agreeable. The benefit may be short-term but every benefit counts when an economy is tight, as is the case with the South African economy currently. The long-term inflationary effects are negative, however, which is why it is important for South Africa to ensure that its economy does not become overreliant on the money in local circulation being uncompetitive.

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