Many people were surprised when they heard there was no Western Union in South Africa. Western Union are a world leader in global money transfers. It seemed that in almost every country across the world there was a Western Union but come to South Africa and you could not find Western Union. Well now that situation is finally over. Western Union together with local bank ABSA will from this month be rolling out the Western Union transfer service at selected branches across the country.

The rollout kicked off with a pilot run at the Carlton Centre branch in Gauteng during September 2008. Now it looks set that there will be Western Union transfer services at almost 200 branches within the next 12 months. This will not only mean good news for ABSA as it will be getting more business by having Western Union on board but also for people in South Africa who want to transfer money outside the country and receive money from those in foreign countries. Standard Bank have a similar arrangement with the Moneygram transfer service which has proved to be very useful for consumers. Now with the ABSA and Western Union link, the competition between ABSA and Standard Bank is set to continue.

After todays Reserve Bank monetary policy committee meeting, it was decided that the key repo rate would remain unchanged at 12% whilst the prime lending rate remains at 15.5% in South Africa. This following on from interest rates being slashed by most major central banks across the world inorder to inject some liquidity into the under pressure markets. South Africa, however, did not look set to follow suit as it does not suffer the same banking difficulties that the United States and Europe face and therefore didn’t need similar remedies, analysts told Reuters.

Reserve Bank governor, Tito Mboweni, was however not too sure how inflation in South Africa is going to pan out in the next couple of months. Mboweni forecast a moderate improvement in the inflation outlook and said it was expected to peak at an average 13.3 percent in the third quarter of this year but inflation hit the 13.6% mark in August this year. It may seem hard to see the rate of inflation coming back down to the target of 3-6% anytime soon but analysts are predicting this target to be reached in the second half of 2009.

For now its a matter of ‘play it as it is’. Interest rates could have gone up because of rising inflation or they could have gone done following the worldwide economic crisis but they remain as is.

What a day for the rand! The rand spiked above the R9/$ level to R9.4595 - a level last witnessed in November 2002. The drop in the rand is been largely driven by the global market turmoil. Rate cuts by central banks around the world saw some currencies, including the rand, recoup some of their earlier losses but this did not last long. The Fed reduced its key rate from 2% to 1.5%, while the Bank of England cut its base lending rate by half a point to 4.5%, and the ECB, which last week decided to keep borrowing costs on hold, cut to 3.75%. Other central banks also taking part include the banks of Canada, Sweden, and Switzerland. Chances are very slim that South Africa will follow suite and also cut rate tomorrow (Thursday) with many analysts predicting rates to remain where they are for now.

At 15:50 the rand was bid at R9.3290/$ from a previous close of R8.9184. It was bid at R12.6867/€ from a previous R12.1303 and at R16.2431/£ from R15.6127 before.

With the JSE slumping today by 7%, the local currency also took a huge knock. The rand lost 5% today against the US dollar. Just after 16:00 today, the rand was trading at R8.90/$ its weakest level since January 2003. Some people out there may think that this slump in the rand is because of the political changes taking place in South Africa right now but that is not the case. It is true that political instability can affect a local currency but in South Africa’s case, the falling of the rand is largely attributed to the chaos on Wall Street which is causing panic on the world markets.

What a day for the JSE! The all share index closed 7.30% in the red today. This is the lowest the index has been since 2006. The local markets are still not sure how to react to the financial crisis gripping the US economy and ultimately affecting the global economy. The $700bn US bailout has been approved but what next for the markets? Markets do not like uncertainty and this is being highlighted by the current slump we are seeing in the markets.

Just looking at how serious things were today on the JSE: Resources were down 9.18%, Platinum stocks lost 10.41% and gold miners only shed 0.83% as investors look to invest in gold as a ’safety net’ during this turbulent time. Industrials fell 5.83%, financials shed 6.44% and banks were down 9.10%. Read the rest of this entry »

There was some relief today for consumers in South Africa as the price of fuel dropped at midnight last night. The price of 91 octane petrol decreased by 29 cents a litre, while 93 octane dropped by 27 cents and 95 octane by 25 cents. The wholesale price of diesel dropped by between 55 and 65 cents a litre, whereas the wholesale price of illuminating paraffin also dropped by 65 cents a litre. This is the third consecutive month that fuel prices have been cut. The Department of Mineral and Energy says lower crude oil prices contributed towards the price cuts. But for how long will the crude oil prices remain low? Not for long according to analysts in the US. Following on from the financial crisis gripping the US right now, some are predicting the crude oil price to rise as high as $250 a barrel. This would certainly not be good news for consumers across the whole world.

Trevor Manuel will remain as Minister of Finance after being appointed in the cabinet led by South Africa’s new President, Kgalema Motlanthe. After the announcement of this news, the rand started to strenghthen against the US dollar. Could it just have been a coincidence or does Trevor Manuel have the ‘power’ to dictate which way the rand goes? Earlier in the week when Manuel had said he was going to resign from his position after Thabo Mbeki resigned, the rand took a knock with many saying that loosing Manuel as Minister of Finance would leave a lot of uncertainty in the South Africa economy. But Manuel was quick to say he would be available to the new leaderhsip if chosen. And today we have just seen Manuel being included in the new cabinet as Minister of Finance showing signs of stability in the governance of the country. 

At 17:21 the rand was bid at R8.1085/$ from a previous close of R8.1543. It was bid at R11.8746/€ from a previous R11.9075 and at R14.9670/£ from R15.0346 before. Is this all due to Manuel staying or because the US dollar is just under a lot of pressure as the US seeks a rescue plan?