The rand ended 2021 on the back foot after the China’s announcement. While the currency did claw back much of the losses to end the year, it was not before the damage had been done in the forex markets.
Global risks point to continued volatility
Possible headwinds will come from the US economy which is seeing runaway inflation – the highest in decades – for longer than expected.
This has drastically altered the market’s expectation after the Federal Reserve doubled down on its stimulus tapering and plotted three interest rate hikes in 2022, said Booysen. He forecasts the tapering will ultimately reduce the liquidity in the market and riskier assets will be the eventual victims, posing a downside risk for the rand.
“There is no consensus on the outlook for the oil price amongst traders at the moment. With a global economy expected to start moving out of pandemic mode, implying increased oil demand, being offset by the rise in US production which could create a surplus, the bulls are taking on the bears in the oil market.
“JP Morgan is predicting an oil price closer to $125/barrel but if the US supply does ramp up, we could see the actual number fall far short. Demand will also be greatly affected by the pace at which the global economy can start accelerating and enter a post-pandemic phase.”
China’s rate of economic growth and its demand for commodities will also be key to the rand’s fortunes in 2022, said Booysen. The eastern powerhouse’s ability to sustain its growth trajectory will ultimately be telling in the duration of the current commodity bull cycle, he said.
“Commodity producing economies, including South Africa, will be influenced greatly by this with an ultimate impact on the rand. The stronger the commodity cycle, the more supportive it will be for the local currency.”
The Impact of the Digital Yuan Currency on South Africa
South Africa is known to be backwards when it comes to technological trends, considering that they are a third-world country. However, that has changed in recent years as more people and companies in SA have penetrated the tech industry globally. There are now more start-ups emerging from SA with young people connecting with global tech companies and trends.
Make moves to beat inflation, experts say
The cash you have in your checking or savings account is losing its purchasing power as the cost of everything from microchips to bed sheets climbs. But don’t panic. There’s good news, at least as far as your investments are concerned, according to data compiled by Dimensional Fund Advisors.
First step towards securing cash is to be capable to invest money into digital assets. But to do that you will need online payment tool. It’s safer than you think. Digital payments have risen to prominence as the best solution for sending and reviewing money online. These are online payments a business can execute and process using digital resources. Digital payments can be point-to-point or travel through any number of intermediaries to get to their destination. Regardless of the journey, there’s no physical transfer of cash involved.
Digital payments solve many of the physical barriers associated with global payments, including:
- Currency exchange. Local currencies make it difficult for companies to pay and get paid quickly. Do you make a payment in your local currency or their local currency? Do you convert funds before sending payment or do they convert after the payment lands?
- Transfer rate. Digital payments are much faster than traditional payments – especially mailed checks or money orders. In an age when business happens in real time, digital payments bring cash flow up to speed for international companies.
- Lower costs. The cost of global payments through traditional networks can be quite high – wire transfers especially. There are also currency conversion costs to consider. Digital payments offer a low-cost alternative, without sacrificing capability or security.
- Security. Emphasis on end-to-end security for digital payments makes them secure through various methods of encryption as well as making payments without the need to know the bank details of the counterparty.
- Convenience. Despite modern online banking interfaces, transferring funds across borders is still a cumbersome task through traditional channels. Digital payments simplify UI and UX: clicking a few buttons and sending payment with basic recipient info.
A solution for South Africans
At Ozow, we make payments easy, convenient and secure.
You need to pay and get paid. We develop simple payment solutions to help you do that.