The South African rand is taking a knock from all sides – namely the crises in Argentina and Turkey. However, the latest round of sell-offs was prompted by the uncertainty surrounding the ANC’s policy of land expropriation without compensation.
Emerging market currencies are quite volatile as it is, any form of
uncertainty is sure to set any emerging market currency on a downward spiral.
The rand dropped value against the US Dollar by over 10% in August, one
of its worst months in more than five years (enter the Nene / Zuma performance).
President Trump’s tweet – vowing to look into the “land grab” issue did not help.
President Ramaphosa tried to set the world markets at ease when he wrote an essay
in the British based Financial Times – stating that Expropriation without
compensation will only be exercised in specific cases.
Any mention of a constitutional amendment does not sit well with traders. We trust
that all will settle down in 2019 – after the elections and when more certainty
is bestowed upon our currency.