How to Hedge Exposure to the South African Rand
South Africa, with a population exceeding 50 million, has a growing consumer base and middle class, making it an attractive market for local and overseas companies. Given how volatile the South African Rand (ZAR) can be, the impact on a company with ZAR exposure can be significant—positive or negative.
In deciding on an appropriate hedging strategy, your treasury department will need to consider at least the following:
In essence, hedging ZAR exposure is not much different from hedging any other liquid currency. There are some unique exchange controls to adhere to, but these are manageable with proper preparation and with the assistance of the local banks.