Good news for the US economy proved to be bad news for emerging- market currencies, and vice versa. That the Fed will tighten is not a debate. The question is one of timing. One would expect that the markets would have discounted this to some extent, but uncertainty still remains regarding the starting date as well as the speed and extent of the cycle.
The continuing changes to the socalled ‘Fed dots’, which reflect the expectations of interest-rate changes of individual members of the Federal Open Market Committee (or the FOMC), indicate just how uncertain this process is. The third broad category to have affected the rand is the ongoing precipitous decline in commodity prices.