Also read the following related article:
The South African rand fell to a 13-year low on Tuesday as emerging market currencies plunged on the expectation that an interest rate hike in the US is imminent.
The rand is currently trading around R12.29 to the dollar.
Listen to the audio below in which Currency Specialist Brigid Taylor gives 5 reasons why the dollar is so strong:
1. Why the dollar is so mighty
“The US economy is back on track,” says Taylor. “Jobs are being created and real wages are rising.”
2. Appetite for emerging market risk is waning
“Every currency in the world is weakening against the dollar,” says Taylor. “Even though interest rates are lower in the US, investors are fleeing emerging markets for safety.”
3. The impact on local fundamentals or conditions
4. Global growth and how South Africa competes
“The Eurozone will enjoy a weaker euro,” says Taylor. “They’re chiefly exporters while the US is a very large importer.”
5. How South Africa’s current account impacts our credit rating