Domestic policies abet Rand’s weakening

Staff Writer | Aug 10, 2019
The South African currency broke though the critical US$15 level this week under the influence of a series of local and global policy threats and setbacks.

The worsening United States/China trade dispute contributed to the weakening currency, but South Africa’s policy choices are a factor, too.

The IRR reminded observers that local policy threats such as those around expropriation without compensation and race-based empowerment policy carried much of the responsibility for why the local currency was trading at a significant discount to fair value.

The IRR warned that South African economists and analysts tended to place too little focus on domestic constraints on investment competitiveness and growth.

According to IRR CEO Dr Frans Cronje, the domestic policy environment ‘tends to exacerbate the consequences of global volatility’.

‘South Africa could do much to insulate itself against global shocks by bringing about domestic policy reforms,’ he said.

 

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