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Cape Town - The rand is incredibly fragile due to poor macroeconomic and fiscal management by the SA Reserve Bank (Sarb) and Treasury over recent years, economist Rob Price of ETM Analytics told Fin24.
"While real rates (interest rates less inflation) are rising, which is a positive for the rand, both the public and private sector continue to spend more than they earn or produce, as reflected in the wide budget and trade deficits," he said.
"Underlying rand fragility is masked when US credit conditions are elevated and capital is flowing into SA to finance the deficit – as was seen in 2009 to 2011. But this is no longer the case."
The US economy has entered a tighter monetary environment, which is supporting the dollar and pulling capital away from emerging markets.
