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Record rand high has little effect on travel demand

18 Nov 2020 - by Sarah Robertson
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Joe Biden’s US election victory has spurred the rand to reach record eight-month highs this month. The currency is currently trading at R15,39 (recorded at 15h00 on November 16) against the US dollar. This, paired with the easing of South Africa’s restrictions on international travel, means that now is the easiest and cheapest time for South Africans to book international trips since COVID-19 reached our shores. However, agents report that the improved conditions are having little effect on international travel demand.

Md of eTravel, Garth Wolff, explained that the rand had strengthened following the US elections, boosted by hopes that the new president will promote world commerce.

“There was a breakdown in relations between the US and China under the Presidency of Donald Trump, which adversely affected world trade. This is expected to be restored under Biden’s leadership, which, in turn, means that there will be greater demand for the raw materials that South Africa supplies to the world. The expected improvement in relations with China is particularly good for South Africa, as China is a major trading partner,” said Garth, adding that the recent news of the COVID-19 vaccine had also positively affected world markets.

“The current strengthening of the rand, together with the commitments that South Africa has made to infrastructure developments will help us to bounce back in 2021,” said Garth. He predicts that the rand will stabilise at the current levels for a while but that our volatile currency’s tendency to depreciate in the long term will still continue.

Andrew Stark, FCTG md MEA, told Travel News that the strengthening exchange rate boded well for travel and that this, paired with the reopening of our borders, was a good time to reinvoice clients for their 2021 rebookings.

Md of Sure Travkor, Anthea Fasulakis, and director of XL International Travels, Marco Tomasicchio, both commented that while the strengthening of the rand was technically making travel more accessible to South Africans, there was still very little demand for international travel due to the current concerns about global second waves of infections and ongoing international travel restrictions.

“Very few South Africans are comfortable to commit to international bookings at this stage,” said Anthea.

“Under normal circumstances an improvement in the rand of this magnitude would have a far greater effect in stimulating travel demand than we are seeing at present,” added Marco.

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