With respect to foreign currency exchange markets, most governments would favour a stable exchange rate over a volatile exchange rate. This is also true for South Africa where volatile movements in the South African Rand pose challenges to industries, businesses and Government alike. There are a multitude of factors that affect the volatility of the South African Rand. These factors are difficult to identify, manage individually and measure. There are several tools that are available to manipulate and control foreign exchange rates in an attempt to reduce volatility; one such tool is the currency transaction tax. Spahn tax is one such form of currency transaction tax. The precursor to Spahn tax is Tobin tax. As a result of many criticisms levelled against Tobin tax, Spahn expanded on this original idea and made a few modifications to address some of the concerns. Spahn focused on creating a two-tier tax base where transactions falling within a normal and reasonable trading range would be taxed at a nominal amount and transactions that fall outside of the band would be taxed at a higher punitive rate. The trading band, or range, would be adjustable though market dynamics on a daily basis using a moving average. No country has implemented Spahn tax yet. The implementation of such a tax would have strong revenue-generating potential. A modification of such a tax with only a punitive rate and a wide trading band could be considered for South Africa. However, in being prudent South Africa does not appear to be in a position to be the first country to implement Spahn tax. There are too many market risks associated with the introduction Spahn tax that cannot be ignored. / Dissertation (MCom)--University of Pretoria, 2012. / Taxation / unrestricted

Globalization is a fact in a lot of businesses today, something that is also relevant in the real estate industry. The currency differs depending on where investments are made and as a result of this real estate investors also face currency risks in addition to all other real estate related risks they already need to manage. The management of currency risk can have different forms, and the purpose of this thesis is to find out how, if and why real estate investors, especially Swedish, hedge this risk. To create an understanding of the issue, a summary of some theories on the currency market and real estate market can be found in the thesis. Only a small amount of research exists on the subject in Sweden and the theories are mainly from foreign studies and the currency risk management from other business sectors. These theories, combined with the research questions, have formed the questions for the interviews this study is made of. Debt in the local currency of where the investment is made can be seen as a natural hedge for the currency risk. Reduced loan-to-value (LTV) ratios from banks for real estate investments have led to a situation where loans, which can cannot be used to the same extent. That makes it more interesting to find out which other instruments are being used to avoid the currency risk and if the real estate investors wants to avoid it at all. The purpose of this thesis is to find the answers to these questions. The interviewed consultancy firms and banks as well as the investors themselves state that the currency risk is a risk that should not occur in Swedish real estate investments on markets with a different currency. The reason for this is that the real estate assets should be the primary focus of the business. To hedge this risk, bank loans and currency futures are the most frequently used instruments by Swedish real estate investors. / Globalization is a fact in a lot of businesses today, something that is also relevant in the real estate industry. The currency differs depending on where investments are made and as a result of this real estate investors also face currency risks in addition to all other real estate related risks they already need to manage. The management of currency risk can have different forms, and the purpose of this thesis is to find out how, if and why real estate investors, especially Swedish, hedge this risk. To create an understanding of the issue, a summary of some theories on the currency market and real estate market can be found in the thesis. Only a small amount of research exists on the subject in Sweden and the theories are mainly from foreign studies and the currency risk management from other business sectors. These theories, combined with the research questions, have formed the questions for the interviews this study is made of. Debt in the local currency of where the investment is made can be seen as a natural hedge for the currency risk. Reduced loan-to-value (LTV) ratios from banks for real estate investments have led to a situation where loans, which can cannot be used to the same extent. That makes it more interesting to find out which other instruments are being used to avoid the currency risk and if the real estate investors wants to avoid it at all. The purpose of this thesis is to find the answers to these questions. The interviewed consultancy firms and banks as well as the investors themselves state that the currency risk is a risk that should not occur in Swedish real estate investments on markets with a different currency. The reason for this is that the real estate assets should be the primary focus of the business. To hedge this risk, bank loans and currency futures are the most frequently used instruments by Swedish real estate investors.

No description available.