Make Money Mondays

A bigger picture for the rand as emerging markets lose favour globally

Is there such a thing as an objective value of the rand, one might ask? Is there such a thing as objectivity?

Andrew Flavell, Wealth Manager at AlphaWealth, puts the term in context. He says South Africans are an extreme lot - they seldom find the middle ground. Money becomes such an emotional subject - especially around dinner tables with family and friends. And that's what led him to to this objective study on the rand.

Rather present the facts and try and portray a more objective view of the rand - and that's the study I did. It's not trying to forecast anything but really it's trying to explain what the make-up and the drivers of the rand are

Andrew Flavell, AlphaWealth

Flavell has set about creating different parameters to those often used to determine our currency value.

South Africans compare ourselves to the pound, euro and dollar and if you look at balance sheets, demographics and make-up of those economies, they are not anything similar to South Africa. So we need to look at our peers.

Andrew Flavell, AlphaWealth

And our peers, he says, are Zambia , Brazil and Russia.

We must realise it's been an emerging market currency sell-off - and it's been a perfect headwind for those countries that have been commodity backed.

Andrew Flavell, AlphaWealth

Listen as Andrew explains why these currencies have been devaluing. For the rand there is a much bigger picture - the macro theme globally shows emerging markets are out of favour.

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