After the Central Bank increased the interest rates last week, many people and businesses are already feeling the effects of this interest rate and it seems like the effects can only be set to get worse. I came across an interesting article on Fin24 yesterday which was titled: Rate hikes denting BEE. Not many people had thought about how increasing interest rates would affect BEE deals in South Africa. After all, most BEE deals are financed by investors borrowing money to finance the deal. Since 2006, the prime lending rate has increased from 10.5% to its current levels of 15%. Read the rest of this entry »

The Monetary Policy Committee (MPC) raised interest rates on Thursday by 50 basis points to 11.50% subsequently seeing commercial banks raising the prime interest rate to 15%. And this may not be the last hike we will see this year with inflation in South Africa continuing to rise. The Reserve Bank governor, Tito Mboweni went on to say that the committee believed that inflation would peak just bellow 9.5% in the first quarter of 2008 and then return into the bank’s inflation target of three to six percent in the last quarter of 2009.

One wonders what will happen if Eskom get the go ahead to increase the electricity tariffs by 53%. It would be very difficult to see the target of 3 - 6% being reached. Some analysts however have questioned the central banks decision to raise rates by 50 basis points but the central bank really had no option if their primary aim is to keep the inflation down. For those heavily in debt, this hike will not be good as monthly repayments are going to sky rocket and forcing more and more people to cut down on their spending and maybe even be forced to sell off some assets.

The Rand has gained strength against the US dollar over the last couple of weeks. Not too long ago, the local currency was trading at around R8.10 against one US dollar but several factors including the weakening of the US dollar have seen the Rand now trading around the R7.70 mark against the green back.

Some also attribute the strengthening of the Rand to a potential change in Zimbabwe. A new government in Zimbabwe could signal a more stable and better economy for our neighbours in the north. Read the rest of this entry »

The major topic of discussion this past week has been about the elections in Zimbabwe. At the time of writing this, there is still no news on the results of the presidential elections that took place last week Saturday. The whole of Zimbabwe is still waiting for the results, so to the rest of the world together with investors waiting on the sidelines. The question on many investors minds right now is whether or not to go invest in Zimbabwe? Read the rest of this entry »

With everything else seeming to be going up in South Africa; fuel, food and electricity, it seems like finally we are hearing of the drop of something, cars. And no it is not the drop in the price of cars but rather the number of cars being sold is falling. New vehicle sales fell by 17.5%, or 10 103 units, year-on-year in March to 47 778 units. This is a rather huge decline but not surprising as consumers are starting to feel the pressure and are finding it harder to purchase new vehicles due to financial constraints. Read the rest of this entry »

All eyes are on the elections in Zimbabwe right now. The voting was done on Saturday but everyone is still awaiting for the results to be announced. The delay is causing a lot of tension not only in Zimbabwe but here in South Africa. The results of these elections will play a part in determining South Africa’s own destiny.

It seems like this is going to be a tightly contested presidential election between the current leader, Robert Mugabe and rivals Morgan Tsvangirai and Simba Makoni. Under Mugabe, Zimbabwe’s economy has been falling under freefall over the last couple of years. The inflation in Zimbabwe is currently 100 000%. Now in South Africa we are worried about a 9.4% inflation rate. Can you imagine how Zimbabwe must be feeling? There is literally no fuel in Zimbabwe, one has to pay obscene amount to source it. In South Africa we are set to almost pay R9 a litre as of tomorrow (Wednesday). Read the rest of this entry »