Monday, August 16

Watch the Numbers

Well, it has been 4 days since the drop in interest rates and the Rand is still trading at R6.48 to the US Dollar but has weakened slightly against the Euro to R8.01 from R7.89 (That’s about 1%).
That is, the Dollar was weakened slightly compared with the Euro with the Rand standing pretty much firm.

I wouldn’t be surprised if the Rand was to strengthen in the next few days as the traders recover from the Reserve Bank doing something unexpected (bunch of pansies).

On the other had, the Oil price is at unprecedented levels thanks partly to uncertainty in Venezuela but mainly to ever increasing demand (Iraq has been factored into the market months ago). If inflation is to go up then I'm blaming the Oil price. In fact, the world economy is in serious danger of hitting its energy limits. (Blame Bush for the best growth the world has seen in a quarter decade.)

Forget anything else, if the oil price hits $50 a barrel and stays there for a meaningful time the rules of the world economy will change as it tries to deal with the energy crisis. Can you say "nuclear power"?

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