Mohit Mathur South Africas currency

The rand is no longer a safe investment option. Investors used to consider South Africa as a good investment option as it had a deep and liquid capital cash flow across border without much of fluctuation in the price of rand. The GDP per person of the South Africa is between that of China and Brazil that is $11,000 a year. Investor used to sell rand when the world economy was doing bad and buy when economy was doing better. But the trend over the period of time has changed and South Africa is no longer considered a safe bet. There are a number of options causing change in this trend. Firstly is the current-account deficit that has ballooned to 6.4% of GDP. Secondly capital cash flows into South Africa have slowed, in contrast to the surge in other emerging markets. Exports have been weak, even allowing for the disruption caused by strikes and the troubles in South Africas European markets.