OK, Tell Me More?
Eish, the Rand has been in a freefall amongst other emerging market currencies. Yesterday, it reached ~R15.55/USD – levels last seen during Zuma era scandals.
Global trade wars are another factor. A trade war may come with a decrease in global economic growth as global trade comes to a halt in the face of heightened tariffs (think import duties). This threat has investors concerned about their exposure to emerging markets – pulling out of the likes of SA and heading into safer, more developed economies.
The shine of Ramaphoria has also worn off with media now referring to the present as “Ramareality”. This reality includes strangling debt levels, our government spending more than it makes, state-owned entities drowning in unprofitability and rampant unemployment – all underpinning an economy that some investors are panicking about. However, the recent volatility is likely only a function of short-term panics and probably won’t be sustainable. Time will tell.