While economists and politicians blame a number of global factors affecting the local currency, they also point out that that the rand is faring better than other emerging market currencies, including Russia and Brazil.
This is the lowest the rand has been since 2001. Dollar strength and a decision next month on US interest rates appear to be the main forces driving the rand lower.
Eyewitness News quotes an apparently upbeat – or denialist – Nedbank economist Dennis Dykes who says other countries are worse off. “Across the world, the Brazilian real is under far more pressure from the rand, even though the dollar which is a commodity currency is under some y pressure.”
Some better news for South African consumer is that the price of petrol dropped by 51 cents a litre but the weaker rand may impact on this with the Reserve Bank warning that a weaker currency could affect its next interest rate decision.
Then you also have the old “exporters” argument with economists like Isaac Matshego saying the weak rand is good news for exporters. Those people love to forget that South Africa don’t really export masses of goods, apart from a few measly oranges, apples and raw metals.
When interest rates start to – inevitably – go up, inflation skyrocket and people cannot afford to make repayments on home and other loans, that’s when the uselessness of the “export argument” will hit home.
