Over the weekend, I had to listen to much bewailing of the state of the nation. I mean, I hear it most weekends – but there are some weekends when the WASPs get especially shrill about declaring their outrage in public. And oh, the outrage.
Also: the ignorance.
I don’t want to be rude about “ignorance” per se – there are lots of things that we couldn’t possibly know all about (for example, I know very little about quantum mechanics, and I don’t lose too much sleep over it). But at the same time, people who know little about quantum mechanics should not be out in restaurants, derogating quarks and neutrinos as instruments of Satan, because of what some housewife from Northcliff said to John Robbie on 702.
And if they were, then someone should be having the “Where did you hear this because you are wrong, and not just wrong in a let’s-agree-to-disagree way but more like wrong in a fundamentally-misinformed-of-the-facts kind of way” conversation.
Back to the Rand: I’ve written it before, but over the last few years, the fluctuations in the exchange rate have had very little to link them to Nkandla, the state of the roads in Bryanston, or the way that the taxis drive on Bram Fisher.
The current depreciation of the Rand is almost entirely a function of US monetary policy, the impact that it has had (and continues to have) on global money flows, and more recently, the ambiguity around China’s growth numbers.
Here are emerging market currencies moving in concert after the Fed announced the QE tapering:
Here is everycurrency, doing the emerging market tango, since 2007:
Here is the ZAR plotted against the Turkish Lira and the Indonesian Rupiah:
I mean – just look at that ZAR/IDR two-step! Do we think that the Indonesian currency traders are concerned that the ANC might win an election there and build a holiday-Nkandla in Bali?
This is an emerging market phenomenon, not a uniquely South African one. Of course there are some local issues that will impact the exchange rate – labour disputes, the mining sector, SARB rate hikes – but as it stands, these are mostly peripheral to the general depreciation.
The Troubled Ten
In the wake of China’s new stance on the Renminbi/Yuan, Bloomberg has been fairly focused on the new “Troubled Ten” currencies. Here they are:
I’m not sure why the Turkish Lira isn’t included there – it’s doing worse than any of them. But I guess “Troubled Ten” sounds a whole lot snappier than “Enfeebled/Exhausted/Emasculated Eleven”.
Either way, we need to pull the Rand depreciation back into focus.
Yes, there are domestic things happening. But the reality is the the state of the ZAR is largely outside of South Africa’s control.
So let’s rather bewail the loss of monetary autonomy at dinner parties. And speak more of Janet Yellen.
After all, she’s playing dice with our money.
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.