Instead the implications and spillovers of Fed rate hikes have to be viewed alongside other domestic and global factors, which have a bearing on the domestic economic outlook and the mandate of the SARB. The euro area as a region remains our largest merchandise export destination and hence, a recovery in euro area domestic demand is in our mutual interest.
However, should the ECB expand its QE program – which appears increasingly likely – and in so doing, cause another round of euro depreciation, this could be to the detriment of our exporters. However, in this case the impact on the rand might actually be secondary to the financial market volatility that these spillovers might create.