After having reached levels of around R7.20 to the US dollar in the last couple of weeks, the rand extended losses against the dollar to more than three percent on Friday (8 August), as the greenback staged a strong rally across the board. The local currency was trading at R7.74/$ at 17:00, 3.5% softer than its previous close in New York, and just off its weakest mark in a month of R7.7450 hit earlier in the session. And it is just not that Rand loosing strength against the greenback, this move is in line with other countries as the US dollar gains strength across the board. The rand has weakened almost 10% to the dollar since hitting a 6-month high of R7.1820 on Monday (4 August).

Crude oil prices slipped below $119 a barrel on the New York Mercantile Exchange yesterday (Monday) for the first time in three months as tropical storm Edouard veered away from energy facilities in the Gulf of Mexico, and a government survey that revealed U.S. consumer spending flagged in June.

Light, sweet crude for September delivery tumbled $3.69 to settle at $121.41 a barrel yesterday, after earlier dropping below $119 a barrel for the first time since May.

Part of the reason for the decline was that tropical storm Edouard lost strength and turned westward to miss vital oil facilities in the Gulf of Mexico, but declining demand is probably the biggest figure in oil’s slump. Crude fell 11% in July after more than doubling in price over the 12 months prior. Read the rest of this entry »

It still is no surprise the sales of new vehicles in South Africa continue to drop. But from a manufacturers point of view, exports have gone up during this slump period in sales in the local industry. During July, Naamsa said that 28 269 new vehicles were exported. This represented an improvement of 13 022 vehicles compared to the 15 247 vehicles exported during July last year. With very few local car sales taking place due to the tough economic conditions manufacturers have been forced to export their vehicles which in the past were being consumed by the local demand.

In the local market, new vehicle sales would remain under severe pressure as a result of the cumulative impact of interest rate rises, inflationary pressures, high levels of personal debt and the slow down in economic activity. New vehicle sales in South Africa continued on their downward spiral in the month of July. It had been feared the the local car manufacturing industry would be hit hard by the lack of sales in the local market but judging by the figures released today, it goes to show that the manufacturers can still remain in business if they continue to export. Hopefully the South African economy will not remain where it currently is today, and as the situation gets better, people will again be able to afford to purchase new cars.

Finally, a bit of good news on the economy front. It has been a while since we have heard of the price of anything coming down. The retail price of petrol will decrease on average by 27c a litre next Wednesday (August 6), the department of minerals and energy announced on Friday. The decrease follows an increase last month of between 69 cents to 75 cents a litre to record levels of between R10.40 and R10.70. The price of petrol now drops to R10.40 a litre in Gauteng and to R10.10 in coastal areas. Diesel prices will also decrease next week but paraffin prices will increase.

The increase in paraffin prices has not been welcome by many as a lot of South Africans use paraffin daily for cooking and lighting. The majority of paraffin consumers are unable to afford a lot in these testing times and adding further pressure on them does not help one bit. Read the rest of this entry »