Renewed concern has been voiced about SA’s ability to withstand further global financial shocks resulting from the tightening of US monetary policy. The rand plunged more than 2% to the greenback on Thursday, despite a stronger euro, hitting R12.9868 in volatile trade before recovering marginally. In contrast, the lira firmed more than 1% after the Turkish central bank hiked interest rates. SA, along with Turkey and Argentina, have been highlighted as countries that are extremely vulnerable to an expected shortage of dollars in global forex markets, amid the US Federal Reserve’s planned balance-sheet reduction. The Fed is paring its purchase of US treasuries, which will lead to reduced dollars on offer to emerging markets. This purchasing, known as quantitative easing and which has been in place since the financial crisis of 2008, is coinciding with the Fed’s policy to increase rates gradually, and coincides with US President Donald Trump’s fiscal expansionary and lower tax policies...
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