ECONOMY
BRIAN KANTOR: Weak dollar saves us from scary politics
The most important single indicator of the future direction of the South African economy is the value of the dollar compared to the euro and the other developed market currencies. Most helpfully for SA and the emerging market world, measured this way, the dollar has lost nearly 4% of its exchange value this quarter. Dollar weakness has brought a small degree of strength to emerging market (EM) currencies including the rand and metal prices, which make up the bulk of SA’s exports. For much of the period between 2011 and mid-2016, dollar strength put pressure on EM exchange rates. Over this period, the dollar had gained as much as 30% versus its peers, the EM currency index lost about the same versus the dollar, while industrial metal prices and the trade-weighted rand had fallen to about half their values. The US Dollar vs Developed and Emerging Market Currencies, Metal Prices and the rand (2011=100 Daily Data) Higher values indicate strengthSource; Bloomberg and Investec Wealth and ...
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