The rand firmed 1% to its strongest level against the dollar in two months today (22 July), despite the greenback’s own rally after a Federal Reserve official said US rates may have to rise. At 16:29 the rand traded at R7.5080/$, having briefly gotten to R7.5005 a short while earlier. This is the firmest the local currency has been since May 19. The rand had closed on Monday at R7.5800. Some analysts predict the rand to remain around these levels for the rest of the week.

Oil’s recent wild ride has some market experts questioning which way black gold is headed in the weeks, months, and even years ahead.

Oil dropped over 11% during a volatile week of trading, as reduced consumer demand put downward pressure on the once hot commodity. Crude oil for August delivery ended the week at $128.88, its lowest level since June 5 and well off its July 11 peak of over $147 a barrel.

“If this is not the [crude oil] bubble’s implosion, than it’s a reasonable facsimile,” analyst and trader Stephen Schork said in his daily market commentary, the Associated Press reported. “Perhaps all we have witnessed was a replay of last August’s subprime induced sell-off. Time will tell.
Nevertheless, for the time being we no longer care to hold a bullish view.” Read the rest of this entry »

As South Africa continues to battle against the rising inflation, it is worth noting that it is not only South Africa facing higher food and energy prices but larger economies such as the US are also battling inflation as is noted below by Jason Simpkins:

Consumer spending, which accounts for more than 70% of the economy, will be seriously threatened in the months ahead, as prices continue to rise, wages plateau, and government stimulus checks wear thin.

Consumer spending has remained strong in recent months, even jumping 0.8% in the month of May. But that boost was largely inflated by the $50 billion in government rebate checks that were cashed and put to use in the month. Read the rest of this entry »

There may be a slight relief for consumers in the horizon. The daily unleaded petrol price increased to an over-recovery of 74.442 cents per litre on July 18 after moving into an over-recovery situation on July 8 2008 for the first time since December 19 2007. An over-recovery means that the basic petrol price based on the daily product price and exchange rate is less than the basic fuel price used in the calculation of the monthly retail petrol. The basic fuel price has dropped by 100.307 cents per litre between July 3 and July 18. An over-recovery therefore implies that the retail petrol price can be lowered at the next monthly price adjustment, provided the government does not introduce a new levy or raise either the wholesale or retail margin. So all eyes will be set for August 6 when consumers will know if the price of fuel does in fact come down.

Since gold traditionally rises with inflation, that means now is probably a good time to add to your holdings.

Here are the essential facts:

At one time the world’s monetary system was based on gold. It is a universally recognized store of value. It can be bought and sold in any country.

And it is scarce. There are 4 billion ounces of gold in people’s hands, enough to fill a cube 60 feet on a side. Of this, investors own 1 billion ounces, and central banks another billion, with the remaining 2 billion ounces accounted for by jewelry and other baubles. Read the rest of this entry »

When some had thought things could not get any worse in Zimbabwe, a new Z$100bn note is set to be released on Monday (21 July). With inflation already at 2.2m% in the country, adding a higher denomination note is just going to push that rate of inflation even higher. With increasing cash shortages in Zimbabwe, the move to release the new note is seen as a way to try help ease the cash shortage. For many years now, the Zimbabwe government has been printing hoards of notes to try keep the economy afloat but at the same time the continual printing of the cash has led to hyperinflation in the country.

In January, a 10-million-dollar note was issued, then a 50-million-dollar note in April. In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for five billion, 25 billion and 50 billion. Now with the 100 billion note in circulation, do not be surprised to see a 500 billion note very soon.

Inflation is spreading like wildfire around the globe, and while not every country is hurting as bad as Zimbabwe with its mind-boggling 2.2 million percent inflation, the United States and Europe are definitely still getting scorched by rising prices.

U.S. consumer prices, as measured by the Consumer Price Index (CPI), increased 1.1% in June, the Department of Labor reported yesterday (Wednesday). That brings the inflation rate for the past 12 months to 5%, well above the U.S. Federal Reserve’s preferred target of 2.0%.

The increase was higher than expected as a 6.6% jump in energy costs and a 0.8% rise in food prices helped to boost CPI up past the expected rate of 0.8%. So-called core CPI, which excludes highly volatile food and energy costs, was 0.3% — higher than its expected rate of 0.2%. Read the rest of this entry »