Mohammed Nalla is one of the most highly respected macroeconomic market analysts to emerge from South Africa. He’s launched Moe-Knows, a macroeconomics knowledge platform. Now living in Canada, he layers a global perspective on top of his emerging markets expertise.

Together, The Finance Ghost and Moe-Knows have multiple years of experience across practically every asset class. In Magic Markets, we unpack market trends and share our insights in a way that will help you grow your knowledge.

In Episode 1: Rollin’ with the Rand, we take a look at the major drivers of Rand strength and weakness, its relative value at the moment (now trading at under R16 to the USD) and how South African investors might think about an offshore strategy.

Use the podcast player below to listen:

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2 Comments

  • Jean
    Posted Mar 29, 2021 at 7:58 am 0Likes

    Hi Ghost

    I’ve listened to a few of the podcasts this far and in this one you discuss offshore investment like buying USD and investing in offshore. I think in another podcast you also mentioned using Easy Equities. I also use EE and it works well but I have been reluctant to take money offshore because seems a little vague and off-putting for these reasons:
    1. EE says there is an optimal amount to fund your USD account in order to make best use of the fees, vat, exchange rates. Can you give your input on this
    2. I have heard of people complaining on getting the money back. You need a certain bank account in order to move the money back and I’ve heard people talking about something like the FNB Global account. Can you explain getting your money back from an offshore investment
    3. Can you again explain in exchange rate terms when it would be best to take money over and bring it back. For instance when the R/$ = R15 take it offshore and when it you want to bring it back and the R/$ is R19 that is good and you win on the exchange rate front and when it is R13 you loose out because you bought $ at R15?

    Thanks I would like to your take on offshore investing for the normal guy.

    • Posted Mar 31, 2021 at 4:36 pm 0Likes

      Hi Jean,

      Thanks for listening! So, what you need to understand is that taking the money offshore in EE means it has genuinely gone offshore. It’s now in USD. To get the cash out, it would be paid into an offshore bank account. You could bring it back to Rand if you want, but then you’ll pay fees again on the exchange rate. For really big hitters at risk of breaching their offshore allowance every year (R11m per year), they take the money out and leave it there, not wanting it back in SA. For the rest of us mere mortals, it’s less of a big deal to bring it back.

      The optimal amount to move each time would be based on fixed costs of exchanging into USD. If the fixed costs are e.g. R50, then trying to move R100 offshore just doesn’t make sense. I’m making those numbers up, but you get the picture.

      Finally, you want to take money out when the Rand is strong (e.g. R15/$) as you get more USD for each Rand. If you did bring it back at R19/$, you would be making a great profit on the currency. The reverse obviously applies. People frequently panic when the Rand loses value and then convert into USD. The right time to switch to USD is usually when the Rand is strong, not after it has dropped 30% because of a crisis.

      Hope that helps! Feel free to pop me an email with any further questions.

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