Following the post about the financial turmoil that resulted when Manuel (pronounced money-well) resigned, comes further worrying news. Bugger the plasma screen, hold on to those pennies (that's what the rand is worth) and try to ride out the storm.
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About $2.16 (R17.3) billion has flooded out of the country so far this year as foreign investors sell off stocks and continue to shun emerging markets.
It was a bit like a mouse trying to calm a herd of frightened elephants.
With both the world financial markets and South Africa's political scene in turmoil, the country's new president went on national TV Sunday promising to avoid any sharp changes in economic policy.
The morning after Kgalema Motlanthe's speech, the rand currency slid even further. Investors are shunning emerging markets as just too risky.
A speech by Reserve Bank chief Tito Mboweni on Sept. 18 starkly exposed South Africa's vulnerability to the global economic turmoil. About 18 billion rand ($2.16 billion) has flooded out of the country so far this year as foreigners sold off stocks.
Motlanthe this month replaced President Thabo Mbeki, who was forced out by his African National Congress. Motlanthe is widely seen as a caretaker for ANC leader Jacob Zuma, who is likely to win the post in elections next year.
South Africa, an economic powerhouse in sub-Saharan Africa, exports commodities such as platinum, gold and diamonds. When the subprime crisis hit, South Africa initially weathered the storm well because its banks weren't exposed to the bad mortgage-related debt. But now it is suffering the secondary effects.A speech by Reserve Bank chief Tito Mboweni on Sept. 18 starkly exposed South Africa's vulnerability to the global economic turmoil. About 18 billion rand ($2.16 billion) has flooded out of the country so far this year as foreigners sold off stocks.
Motlanthe this month replaced President Thabo Mbeki, who was forced out by his African National Congress. Motlanthe is widely seen as a caretaker for ANC leader Jacob Zuma, who is likely to win the post in elections next year.
"We are seeing less capital being available in emerging markets generally and in particular South Africa," said Jac Laubscher, economist at Sanlam, a financial services group. "The fact we have a current-account deficit in excess of 7% means the financing of that current account becomes more of an issue, and there is a possibility of downward pressure on the rand."
Gold traditionally is a refuge for investors in time of turmoil, and the increase in gold prices is good for South Africa. But even more important to its economy is platinum, and its price has slumped about 50% since March.
"Platinum has overtaken gold as our most important export, and the platinum price has halved," Laubscher said, adding that increases in the gold price were unlikely to compensate.
South African gold trader Charles Leishman of Standard Bank said gold was being traded emotionally; platinum's price was falling because of weak industrial demand.
"They're actually very distinct, given the environment we're in the moment. [Platinum] is very demand driven. Gold at the moment is very emotionally driven.
"Nobody knows how long it [the global credit crisis] is going to go on for. You can inject all these billions of dollars but is that going to take the toxic sludge out of the system?"
