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International Monetary Fund economists Nasha Mavee and Axel Schimmelpfennig have taken a close statistical look at why the rand is one of the most volatile currencies in the world. And there are no prizes for guessing the answer, or at least a big part of it. Global factors such as commodity prices and US economic developments, and global perceptions of financial market risk, have a big effect. But "local political uncertainty emerges as a significant driver of the currency’s volatility", say the economists, who suggest that while SA can’t control many of the other factors, this one it can control. "More policy and political predictability could thus help to smooth the rand’s volatility," they conclude in an article published on the website Econ 3x3. The crazy SA politics factor was again the cause of the rand’s decline this week, just when emerging market currencies were racing ahead. And it was the narrative that dominated the statement of the Reserve Bank’s monetary policy commit...

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