The Automobile Association (AA) got its hands on the Central Energy Fund’s most recent unaudited mid-month fuel price data, and by the looks of it, we could be in for another fuel price increase this August.
While the Rand has shown some improvement against the US Dollar, international oil prices have thrown a spanner into the works. The upward surge in global oil prices is largely due to on-going political instability in the Middle East, outages in Venezuela and Iran, and concerns over international inventories.
When the price of global crude oil drops, so does our fuel. When countries are at one another’s throats, the price of oil goes up, and so does the fuel. This is an oversimplification of what is happening in the world right now, of course, and there are many other factors to take into consideration.
We live in volatile times, and the current situation remains fluid. According to the AA;
For the time being, though, we’re almost certain to see an increase of at least:
• 7c per litre of petrol, and;
• 20c per litre of diesel.
How has the Rand been performing? Well, we have to look at a couple of important factors,
First off, Lesetja Kganyago has been reappointed as Governor of the Reserve Bank for another five-year term, a move which has both dismissed talk of nationalisation or mandate change, and reinforced the government’s supposed stance on continuity.
This is a good thing. We need endurance and stability in the central bank.
Furthermore, the latest US data report points to a likely rate cut at the end of July, and economic data points to a stable market.
And finally, the National Treasury recently announced its plans to rescue South Africa’s floundering power utility, Eskom, by allowing it to access funds (specifically set aside for its restructuring and miraculous turnaround) a lot sooner than anticipated.
Eskom, of course, isn’t the only parastatal standing in line with its hands out, but the SABC, SAA and Denel are also due some relief funds any day now. The rescue of Eskom in particular, though, given how dire the situation has grown, has put investors at ease.
With Eskom given the necessary support to improve its financial situation, the markets stable, the government showing some intelligence and investors calmed, the Rand has begun to strengthen, dropping below the R14.00 mark.
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