Learning to live with currency normality

The continued strength of the rand during the past year has caught out many South African companies, including mining major Anglo American. It may force them to re-evaluate their foreign exchange and interest rate hedging policies. By Phil Moore

The good news for mining conglomerate Anglo American was that the company’s headline earnings for the first half of 2004, at $1.3 billion, represented a new record for the mining and natural resources giant.

The bad news was that the increase in earnings would have been considerably higher than 52% had it not been for the strength of the rand. With each 1% movement in the dollar/rand rate having an impact of almost $25 million on headline earnings, Anglo American reported currency translation