All Eyes on the Fed and the SARB

SOUTH AFRICA - Report 16 Sep 2013 by Iraj Abedian

This week the Federal Open Market Committee of the US Federal Reserve Bank meets to discuss the conduct of monetary policy. Expectations are that an announcement will be made concerning the timing and extent of the reduction of the stimulus program, also known as “quantitative easing”.

Against this backdrop, the rand exchange rate faced strong headwinds, especially since May 2013 (see Graph 1) as speculations on the Fed’s tapering of Quantitative Easing gained currency. As a result investors pulled assets from Emerging Market Economies back to the dollar.

Graph 1

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