George Glynos - The Rand's Reckoning

The South African rand looks resilient - but George Glynos warns that appearances are dangerously deceiving. In this interview with Irakli, ETM Analytics Co-Founder and Head of Research lays out exactly why the risks are building asymmetrically against the rand - and why complacency could prove costly. On the scale of the current oil shock, Glynos is unambiguous: "You're talking about a hit of in excess of 20-odd percent of the world's oil supply. Compare that to the 1973 embargo or the 1979 Iranian revolution — those removed 6 to 7%. This is categorically different." On why the rand hasn't moved yet — and why that itself is the warning sign: "The Rand hasn't responded strongly to it yet, which ultimately means that it is a little vulnerable. Should the shock extend, the greater the likelihood that the Rand will come under some pressure." And on South Africa's fuel supply specifically, Glynos raises an alarm few are talking about: "If we're not able to source that refined fuel from the Persian Gulf, then all of a sudden I think we're going to find ourselves in a more stressed environment — with vast implications for the economy. How mines run, how high-energy sectors run." The verdict is stark: either this war ends quickly and the terms of trade recover — or the rand adjusts sharply to reflect the damage already done to South Africa's trade balance. There is, Glynos says, no third option.