SIMBA countries
have trade deficits. Currency decline should reduce imports and improve
exports. Unfortunately; strike action in industry, inflation, uncertainty and
increasing fuel import costs will negate the potential impact of devaluation. Rand
is now trading above 10 to the dollar. For SIMBA
countries, currency volatility will persist until the QE situation is remedied.
Tuesday 27 August 2013
Rand above Ten
QE gives then takes away. Problems of 2008/09-Global
economic decline still haunt currency markets. The Fed Reserve promised months
ago: cheap money for Too Big Too Fail Banks was coming to an end. In response,
financial investors with access to these funds are taking funds out of South
Africa and other developing countries.
South
Africa , India , Malaysia , Brazil plus Argentina (SIMBA)
have taken the biggest equity market and currency declines. Only South Africa has resisted trying to resolve a situation that is in
the hands of the market. Some emerging counties are frantically trying to stop
currency decline, at no avail.
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