As regards the exchange rate, the fact that South Africa has a current account deficit and is reliant on portfolio flows has meant that the impact of global risk aversion has been somewhat more severe on South Africa than other emerging market countries, coupled with the fact that our markets tend to be more liquid and deeper than other emerging markets.
However, while depreciation in the rand exchange rate poses inflationary threats, it could also improve South Africa’s outlook if it results in greater competitiveness of South Africa’s exports and an improvement in the terms of trade and current account deficit.