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  • Layman Money Talk: Is The Rand Overvalued?

    26 Oct 2010 by Lindsay Williams in Finance, investec, Money

    A long time ago, in a galaxy far, far away, I sat in a mid-priced family car outside a pub. Having read the AA Guide to Southern England, and finished my bag of crisps and bottle of Coke, I waited patiently for my parents.

    Those were less enlightened times when children were not afforded the status of demi-gods and when schools were places that children attended more frequently than their parents and when a school week didn’t include weekends, extra murals and extra lessons because young Justin or Kylie hadn’t averaged over 90% for environmental studies.

    Anyway, in those days, a pub was a pub. It was full of smoke and beer, and most importantly, unlike today, grown ups. Nonetheless, despite being refused admittance, the pub had already become part of my life. Later it became a place of refuge and unconditional welcome,  and remained a constant for decades while all else around me seemed determined to change.

    So it is with a heavy heart that I say goodbye to the pub.

    Logic dictates that the new regime of roadblocks about to be unleashed that allow members of the constabulary to check your prostate gland and question your knowledge of South African military history before allowing the motorist to proceed is good enough reason to stay at home and drink. Lack of public transport is another.

    But right up there with the best of them is the price of a glass of wine. I’m told there’s a wine lake in South Africa large enough to host the America’s Cup, and yet my three local pubs still insist on charging me R30-40 for a glass of what can only be described as spectacularly average sulphite laden plonk.

    In London, any pub will cheerfully have a punter part company with three British pounds for a glass of equally unpalatable muck. The difference is that in London the glass in which it’s served is the size of a young goldfish bowl.

    Size matters of course, but in this case the startling realisation is not the volume of the offering but that the price of the product is the SAME. South Africa has caught up.

    Two years ago a dollar briefly bought you nearly R12. Today it gets you less than R7. A pound was worth, again very briefly, R18. For a few moments a glass of house wine in a London public house set the unlucky South African traveller back well over R50. Today the alcoholic advantage has been eroded and I may as well be in the Red Lion in Duke of York St. rather than Peddlars on the Bend in Constantia.  They’re now one and the same.

    It’s official; the Rand is overvalued.

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      That’s not to say the Rand won’t go even stronger yet. http://www.humanaction.co.za/2010/09/rand-still-has-significant-strengthening-potential/

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