Given these experiences, it is not difficult to imagine the Fed tightening, generating further volatility and creating expectations of more emerging-market crises.8 But emerging markets are in better shape than they used to be, in particular because they have flexible exchange rates.
South Africa, perhaps more than other emerging markets, has developed a robust track record of enabling the currency to carry the brunt of the adjustment to global volatility. Importantly, the low level of foreign-currency liabilities helps to reduce the risk of a sudden sharp crisis and cannot act as a complicating factor in policy decisions.