TRADE AND INFLOWS
BRIAN KANTOR: Breaking the rules breaks emerging markets
Emerging-market currencies have been caught up in the political and now financial crisis confronting the Turkish economy and its leader. Alas, the rand has been one of the worst performers, especially on Wednesday. It is a trend that continued on Thursday morning. The Turkish lira has regained some ground against the still strong dollar and significantly more against the weaker rand. At its worst this month, on August 13, the lira had fallen from $4.99 to $6.88, a decline of 37%. That same day, the rand was about 9% weaker against the dollar compared to August 1, and so 21% up on the lira. As I write mid-morning on August 16, the lira is now stronger than it was at $5.81 and the rand has weakened to $14.511. The local currency has now lost about 4.6% of its beginning-of-August dollar value. This is not good news for the SA economy. It means more inflation and less spending power for hard-pressed households and firms.The Turkish and SA economies have something in common: dependence o...
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