Rand plummets to lowest while consumer debt remains high
Monday saw the rand plummet to record lows in seven years, with the US dollar to rand exchange rate almost reaching R18.00.
No doubt, South Africa’s poor economic growth, increases in commodity prices, and increases in US interest rates will see the Monetary Policy Committee raise the repo rate in order to compensate for the country’s economic downturn.
DebtBusters' CEO is of the opinion that current trends are indicative of further rate hikes in South Africa. This could take the repo rate up to 6.50% if the expected 25 basis point hike is followed through.
“Expected hikes in the repo rate later this month coupled with electricity rate increases, water restriction penalties and food prices soaring as a result of the ongoing drought, are just some of the financial risks facing South African families as they start the New Year. Consumers will need to prepare themselves and find other means to pay their monthly expenses as opposed to taking out loans”, says DebtBusters' CEO.
DebtBusters latest Q3 Debtometer Report reflects the current economic difficulty which shows that clients require 102% of their net income to service their debt before paying for any living expenses. “This is just the beginning of tougher financial times for consumers, with 2016 poised to be a strain for consumers, especially those living on the breadline”, explains DebtBusters' CEO.
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In particular, DebtBusters' CEO warns middle and upper income earners to watch out for increased living expenses and to factor these into their monthly household budgets.
“These consumers have houses, cars and ample monetary commitments, such as school fees, mobile contracts, and so on. An expected repo rate increase, coming on the back of the festive season spending spree and already maxed out credit facilities could be the tipping point for many South Africans, where they will no longer be able to service their financial commitments”, adds DebtBusters' CEO.
According to the latest Consumer Bureau Monitor Report (CBM) released by the NCR, nearly 54% of South Africa’s credit active consumers are experiencing or have experienced financial problems with their accounts.
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