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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: philv who wrote (19432)	10/22/2003 9:21:40 PM
From: sea_urchin	Read Replies (2) \| Respond to of 81956

Phil > why is the S.A. rand so strong? I suppose I could answer it this way 1. High interest rates, allegedly to reduce inflation, attract foreign capital. That strengthens the balance-of-payments, and thus the rand. Inflation is apparently now about 5-6% while interest rates are 8-10%, still far too high, particularly in view of the fact that growth is only about 2% pa. In view of massive unemployment, SA should have a growth rate 3 times that. 2. Very low national and fiscal debt. Apparently doing what the IMF has asked, the government has reduced foreign borrowing to negligible amounts which I suppose is commendable. 3. Weak USD adds to the attraction of "emerging market" economies Anyway, like with the strong USD, the strong rand is destroying SAn industry, particularly that which is export related, and chasing away jobs. Because of all kinds of political interference related to affirmative action and which result in low productivity, SA investments, other than those related to primary products, are not attractive. Thus much of the money coming into the country does not find a long-term home and merely adds to the inflation.