MARKET OVERREACTED
Rand on the mend as Turkey lifts emerging markets
The rand could be poised for a sharp recovery once the dust engulfing emerging markets clears, according to the head of the economic research unit at Old Mutual Investment Group. In a note to clients, Johann Els also said the market had overreacted to the recent GDP numbers, which showed that the SA economy had slipped into a recession for the first time in almost a decade. The rand fell to a two-year low against the dollar last week, before regaining some of its losses. A weaker currency increases the cost of imported products, including vehicle fuel, which in turn raises prices consumers pay for goods. The volatility in the rand has coincided with elevated international oil prices, leading some economists to believe that the SA Reserve Bank could raise interest rates when its monetary policy committee concludes its meeting on Thursday. But Els said emerging markets are unlikely to go into a full-blown crisis and their economies are in better shape than they got credit for, with a ...
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