Strong or Weak Currency for South Africa - 2655 Words

Topic 1. A weak currency or a strong currency for the South African economy? What are the pros and cons of a weak or a strong currency in South Africa? Discuss. Table of Contents Page Number 1) Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦.3 2) Benefits of a weak Rend in South Africa†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦....3 3) Shortcomings of a weak rand in South Africa†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦...4 4) The Pros of a strong rand in South Africa†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦5 5) Cons of a strong currency†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.7 6) Recommendation for South Africa economy†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦8 7) Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦..9 8) References†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..10 1. Introduction A strong currency†¦show more content†¦SA cannot simultaneously lower the cost of its labor in a global context and raise the real disposable income of local workers. The reason companies benefit from a weaker exchange rate is that it improves their competitiveness. Unfortunately, if wages rise by as much as the currency has weakened the benefits of the weaker rand are quickly lost. Therefore, unless unions agree to contain wage increases to below the inflation rate, and take a real cut in wages when the rand depreciates, any plans to forcibly weaken the exchange rate are pointless. Madura (2009:172) indicates that the negative side of a weaker currency may include an upward inflationary pressure and increased prime lending rates by financial institutions. Thus, in the long run foreign companies will be driven out of the market as local goods seem to be cheap for local consumers; however, faced with little competition than before, local producers will increase prices culmina ting in an inflation stricken economy. Also a rand that is extremely weak would imply that most importers will seek domestic supply of goods. Domestic suppliers then have more power and are able to increase the selling price of goods. Moreover, less home grown business investments will flourish partly owing to deterring interest rates that shuns more investments. 4. The Pros of strong rand in S.A Currencies rise and fall based upon the performance of the local economy and the sentiment of investors. If aShow MoreRelatedWhat Are The Pros And Cons Of Anglo American Plc In South Africa1144 Words   |  5 PagesPortfolio 2 Submission Case: Anglo American PLC in South Africa (from Lesson 5) 1. Who are the various stakeholders that Anglo American needs to consider as it adopts an effective HIV/AIDs strategy? o Anglo American’s stakeholders are its employees, the employee’s families, their communities that they reside in. Political officials, health organization, its shareholders, hospitals, drug companies and anyone else that may be affected or can help this health epidemic. This is not a problem just forRead MoreWhat Is The Nominal Effective Exchange Rate1809 Words   |  8 Pages2005: Using the Nominal Effective Exchange Rate (NEER), unadjusted weighted average rate or currency index at which one country’s exchanges for multiple foreign currencies. NEER is an indicator of a country’s international aggressiveness in the forex market. The countries used for the calculations of NEER are Brazil, Canada, China, France, Germany, India, Japan, Mexico, Russia, Singapore, South Africa, South Korea, Taiwan and UK against U.S. Dollar. For 2005, relative value of NEER is 0.972903 whichRead MoreInternal and External Factors Affecting Uk as a Destination Essay1684 Words   |  7 PagesDepending on how strong the UK pound is determines how well the country’s economy is; if the pound is strong this means the country is doing well and vice versa. However this also has an effect on the number of people that visit the UK, a strong pound actually deters overseas visitors due to them receiving fewer pounds when exchanging their own money as one UK pound is worth more than one of their currency. 2010 Exchange rates http://www.xe.com/ 25/11/10 When the pound is weak this means theRead MoreAssignment1318 Words   |  6 PagesChapter Three The World Marketplace: Business without Borders Case Connection China in Africa: A Big Step Forward, or a Bigger Step Backward? Entering an untapped international market can strengthen a business tremendously—but what if the costs outweigh the benefits for the market itself? China has long been an important player on the global stage, but recent advances in manufacturing, natural resources, and energy production have catapulted the expansive country to the forefront of internationalRead MoreBussiness Qa Essay1476 Words   |  6 Pagesenjoys a comparative advantage in their industry? 3. Explain how to calculate the balance of trade. How does the growing United States trade deficit impact the economy? Why? 4. Explain the meaning of â€Å"strong† currency and â€Å"weak† currency. What are the advantages and disadvantages of each? 5. Why is outsourcing such an attractive way for firms to tap into foreign markets? What are the risks of foreign outsourcing? 6. Outline the potentialRead MoreCase: Anglo American Plc in South Africa (from Lesson 5) Essay1822 Words   |  8 PagesCase: Anglo American PLC in South Africa (from Lesson 5) 1 Who are the various stakeholders that Anglo American needs to consider as it adopts an effective HIV/AIDs strategy? - Anglo American employees and their families - Government bodies - Non- Profit organizations (NGOs)/ World Health Organization (WHO) - Competitors/ Other large mining concerns or companies operating in South Africa - Pharmaceutical companies - National Union of Mine Workers - Financial Institutions - ShareholdersRead MoreSwot Analysis : Texas Instruments Inc.1197 Words   |  5 PagesThis review provides an in-depth strategic SWOT analysis of the company’s businesses and operations in the areas of internal strengths and weaknesses and external opportunities and threats. (Sector Publishing Intelligence) Strengths †¢ Strong market position: One can see that Texas Instruments is generally considered a pioneer and forerunner in the technology and innovations of semiconductor products, such as: defense, metallurgical and digital products. Texas Instruments Inc. has a 29% revenue shareRead MoreCentral Banks: Fighting Their Own Battles1659 Words   |  7 Pages This could change, however, if inflation persistently undershoots expectations. It would be consistent with much more deep-rooted deflationary psychology than previously deemed, as well as continued lack of corporate pricing power stemming from a weak global economy. Under these circumstances, we could see the Fed shift to a more dovish stance, but only if wage inflation remained well anchored. For the time being, the bottom line on Fed policy is simple: the FOMC is quite prepared to reduce theRead MoreHuman Resource Management in Multinational Banks in Tanzania1069 Words   |  5 PagesUnited Republic Of Tanzania is a developing coun try, located in East Africa. Tanzania has high level of unemployment, poverty, and a weak national institutional system. After independence in 1961 till 2000, the country had little influence on the business activities of foreign investments and was passing through transformation from its socialist policies to a market economy. Towards the end of 1980’s, however, the views of â€Å"African socialism or Ujama† began to experience a series of extremely hardRead MoreHuman Resource Management in Multinational Banks in Tanzania1081 Words   |  5 PagesUnited Republic Of Tanzania is a developing country, located in East Africa. Tanzania has high level of unemployment, poverty, and a weak national institutional system. After independence in 1961 till 2000, the country had little influence on the business activities of foreign investments and was passing through transformation from its socialist policies to a market economy. Towards the end of 1980’s, however, the views of â€Å"African socialism or Ujama† began to experience a series of extremely hard