Rand exchange rates significantly impact the cost of distributing imported tech in South Africa and, ultimately, the prices end consumers pay.
As South African PC hardware wholesalers import many tech-related and other products, they are vulnerable to exchange rate volatility. “This unpredictability makes it difficult for distributors, resellers, and retailers to set stable pricing for consumers. At Syntech, we manage our stock with forward cover to help normalise these fluctuations,” said Martyn.
“Mustek manages its margins by adjusting selling prices in line with exchange rate fluctuations, and thus, the net realisable value of the stock would increase if the Rand weakens in comparison to the rate at the time the stock was brought in,” said Coetzee. A capped forward involves a firm buying a synthetic off-market currency forward and another option. This provides the benefit of favourable exchange rates.
Volatile exchange rates also impact South African PC hardware retailers. However, they observe different effects.