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D VOLATILITY. IT MATTER?1 Introduction The South African rand has been relatively volatile as the currency has flexibly responded to do. estic and external disturbances. Domestic shocks have been relatively large in recent years, elevating rand volatility to above the VIX (US stock price volatility, a commonly used in. icator of global risk ...
In South Africa, the currency enjoyed a period of strength in early 2022 based on high commodity prices and a different view of risk-on and risk-off. However, events in April showed just how vulnerable the rand remains to both internal and external shocks. “The onset of increased load-shedding and the flooding disaster in KwaZulu-Natal, as ...
(Gadanecz et al, 2018). In South Africa, global uncertainty shocks could depreciate the rand and increase inflation (Mumtaz and Theodoridis, 2015). Uncertainty shocks could be inflationary due also to precautionary increases in prices by firms (Redl, 2015). This paper assesses the impact of rand volatility on inflation in South Africa. The analysis
- Ken Miyajima
- 2019
Apr 17, 2023 · South Africa’s rand is traded in large volumes globally and is seen as a proxy for emerging market investment. It makes the currency highly exposed to external shocks and, thus, highly volatile. According to the IMF, the rand is one of the most volatile currencies globally compared to advanced economies and emerging market peers.
Dec 13, 2019 · The rand is also subject to external shocks, at least through two important channels. First, the rand trades in large volumes globally. Compared to major EMs, South Africa’s daily currency turnover in global markets scaled by official reserves is by far the highest partly as the rand is traded as EM proxy (Figure 4, left panel). Second ...
May 20, 2019 · The results suggest that the exchange rate tends to act as a shock absorber to the shocks that hit the economy; a large proportion of the variation in the rand can be explained by other shocks, while rand shocks themselves explain a relatively small proportion of South Africa’s macroeconomic volatility. That said, the role that the exchange ...
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SOUTH AFRICA INTERNATIONAL MONETARY FUND 7 EXECUTIVE SUMMARY The financial system has thus far weathered the shock of COVID-19, but risks continue to loom amidst a weak macroeconomic outlook. The pandemic crisis hit South Africa hard, as nonresident capital outflows accelerat ed, and the domestic and global slowdown precipitat ed a
