To: sea_urchin who wrote (18019 ) 4/16/2003 3:17:52 PM From: Ahda Read Replies (1) | Respond to Still, 12.5% pa is an unacceptably large inflation rate, especially for an economy which grows at less than 3% pa and whose principal exports are derived from mining, agriculture and tourism and therefore have to be highly competitive. You may be unaware that the long-term SA Government treasury bond interest rate is 12% so it's clear that this represents a negative return on cash so invested. Foreigners who can take advantage of the appreciating currency, however, get the best of both worlds --- high interest plus a gain on the currency transaction, but only for as long as this windfall lasts. As you see, the situation is extraordinary --- an appreciating currency in the face of considerable inflation and minimal national growth. That's why I say the money must be coming in for a "non-investment" reason, in other words, to avoid confiscation, or whatever, somewhere else. What I find amazing is that the SA government is so complacent, in fact apparently happy, about a situation which is, in effect, destroying the main sources of income of the country.
