I don’t like saying “I told you so” (…ok, ok, I do, actually) but look at the rand. More than two months ago, when the rand seemed to be headed towards R10 a dollar, I predicted that it would come back, despite dire predictions to the contrary. Now we’re well below R9 a dollar and heading south, and the danger is that the rand may strengthen too much, to the detriment of the economy. In 2003, the rand’s dramatic rise led to sharply lower interest rates, sparking the debt-fueled consumer binge which pushed the inflation rate into double digits. I hope the South African Reserve Bank takes note of Rian le Roux’s argument for a more interventionist approach to keep the rand from strengthening too much this time round.
Betting on the rand, Part 2