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South Africa and the RandJukka Valimaa & Phil Walker
Why is the rising rand a problem?
• ANC support 60%• Tripartite Alliance– COSATU– SACP
• COSATU Secretary General– "We will support the ANC to win the local-government
elections next year, but we can't support people we definitely know are…unfit to be leaders. … If we can't get our way, why must we legitimise their campaign and give them a blank cheque?"
What could be done about it?
• 1. Lower interest rates• 2. Quantitative Easing
Interest Rate (Nov 2010: Record low, 5.5%)
Inflation (very low, 3.4%)
Exchange Rate (very strong, 1 USD = 6.89 ZAR)
Next step: Change capital account balance
• By Tobin tax? No.
• Eliminate apartheid-era restrictions on capital outflows
Questions?
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