2022: Reflections
on a Year of Crisis


Chris Paizis

Head of Corporate FX and
International Banking at Absa Group


Rand weakness, dollar strength, war in Europe and challenges at home and across the globe. How will FX markets remember the year?

As he replays 2022’s highlights reel, a single word echoes in Chris Paizis’s ears. “Crisis,” he says. “If I had to sum up the year in one word, it would have to be ‘crisis’.” As Head of Corporate FX and International Banking at Absa Group, Paizis has had a front-row seat for 2022’s drama, from the surge in global inflation to ongoing supply chain problems and the continued spike in interest rates.

At the end of 2021, Paizis reflected on a “nervous” year. The 12 months that followed brought a string of major news headlines, including the surprises of the US midterm elections, the revolving door at the UK Prime Minister’s office, the COP27 climate conference and build-up to the ANC’s year-ending elective conference. Yet one event stands out above all others: the conflict in Ukraine.

“It has changed global geopolitics, as well as the risk-on/risk-off environment,” says Paizis. “We’ve spent the bulk of this year in a war scenario and – from a foreign exchange (forex, or FX) point of view – the United States has clearly benefited in terms of currency strength.”

Local factors, global crises

The rand started 2022 at R15,94 to the dollar, climbing to about R14,50 in March before crashing to well past the R18 mark in October and November. But, as Paizis explains, “The perceived weakness of the rand has really been about dollar strength. South Africa’s internal factors – which are significant, to say the least – include energy challenges, logistical issues and supply chain constraints, which have been exacerbated by conditions like the crisis in Ukraine. But those local factors have gone under the radar somewhat. In 2022, it’s really been all about global factors.”

The strength of the US dollar saw it approaching unprecedented parity with the British pound, yet Paizis notes that even that had less to do with sterling weakness than with dollar strength. “If you compare the rand with the crosses – in other words, the sterling, euro and some of the other majors – it really hasn’t moved that much relative to what it’s done against the dollar,” he says. “That just shows how significant the dollar strength has been in this risk-off environment.”

Inflation and interest rates

The FX landscape has also been shaped by global inflation and interest rate spikes.

“When we first started to see inflation coming around globally, the debate was whether it might be a transitory thing,” says Paizis. “I think it went further than most people expected, with higher rates than we’ve seen in a very long time. There’s a definite concern that unless those high rates are maintained – at least in the short term – inflation could be a lot more than just ‘transitory’! That’s coupled with low growth in many major markets. If you add all those factors together, 2022 has been a year of significant crisis in financial markets – much more so than during the Covid-19 crisis of 2020.”

Learning to adapt

Having said that, Paizis says that the hard lessons learnt in recent years paid off in 2022. “Covid taught us that the most important thing to do in a crisis is to manage your cash flow,” he says. “And we know that, for many of our clients, FX is a significant determinant of that cash flow. But crisis forces an absence of complacency, and it has made our clients more nimble and better able to adapt.”

The various economic and geopolitical crises have masked a significant change in the way that the real economy operates. While Paizis expects exchange rate markets to continue as they always have, he goes into 2023 with deep concern about the impacts on the real economy.

“2022 has been a year where crisis has fed into crisis,” he concludes. “It’s been a year of not only crisis but also of adapting. My concern is that, as nimble as our clients have become, one can only adapt so much before the lack of growth and higher input costs start having a real impact.”

Chris Paizis

Head of Corporate FX and International Banking at Absa Group

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