SA ducks Turkey's currency fallout
The Reserve Bank’s hawkish stance finds favour with foreign investors
The rand and South African bonds are managing to avoid any contagion from eroding confidence in Turkish monetary policy. This is unusual because problems in one emerging market tend to spill over into others. Questions about the Reserve Bank’s independence, meanwhile, are not in doubt for now, and the Bank’s mildly hawkish stance has found favour with foreign investors, analysts say. In contrast to what is often the case, the rand and the Turkish lira took sharply different directions against the dollar in July. The local currency appreciated 3.36% against the greenback, even as the lira slumped 7.15% to an all-time low. Turkish President Recep Tayyip Erdogan has made it clear he wants interest rates kept low in his country despite rising inflation, with some signs that political pressure is having an effect.
The US and Turkey are also engaged in a political battle over the detention of a US citizen, something that sent the lira to a record low on Thursday. According to analys...
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