The rand dipped below R8 per dollar today for the first time since August last year… good news for me, because I am planning an overseas trip, but bad news for the economy. I explained why in a previous post, but to recap: at this level, our manufacturers and exporters – especially the mining industry – are going to find it hard to compete in international markets. That means our recession could end up being deeper and longer than expected.
One has to wonder why the rand is strengthening like this? Could it be in anticipation of the MTN/Barthi deal, which would see a large capital inflow? Or is there some other capital inflow happening that we’re not aware of?