Those decisions were shaped by a deteriorating inflation forecast, with a strong likelihood of a sustained target breach, starting with the unexpectedly high May print, at 6.5%, as well as the June outcome of 7.4%. The rand had also begun weakening after a period of resilience. Furthermore, inflation expectations were clearly rising, both in survey results and as implied in financial market variables.
Third, the capital account itself needs to be managed during the process of capital account liberalisation. There is a hierarchy in the nature of different types of capital flows in real life. For example, foreign direct investment is preferred for stability, and quantum of short-term external debt, by residual maturity, should not be excessive.