The Rand is getting ripped a new one against major currencies...

antowan

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At time of posting: Rand/$ 11.05


http://www.fin24.com/Markets/Currencies/Rand-breaches-R11-level-20140123

Johannesburg - The rand weakened more than 1% to the psychologically key R11/$ level on Thursday, its lowest since October 2008 when R49bn of capital was pulled out of the economy.

On the first day of strikes at platinum mines, the rand was at R10.9910/$ at 15:42 GMT, down 1.05% from Wednesday's New York close, after earlier touching 11.
 
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DJ...

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It's all emerging market currencies that are taking an absolute battering. It's due to weak economic data from China and we're taking the brunt. The issue is that there are concerns that emerging markets don't have sufficient liquidity in treasury functions to shore up any holes but that's just not the case in SA. We are however catching quite the cold because of this.

The mining strikes have not helped one iota, and anyone who claims they have had no impact does not have an ear to the ground re: sentiment at the moment. All international eyes are on the strike and we proved last year what can and might happen this time around...
 

SoulTax

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printing money ;)

Well looking at the charts, the value of the GBP is going up vs the USD during this time. I understand that a lot of that has to do with Printing Money, but SA is doing the same things to try to stave off this tidal wave, the SA economy is just in a much worse place so their QE is not being effective.
 

DJ...

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Quantitative Easing through some pretty complex and interesting asset purchases with money they grow out of thin air. They effectively pump liquidity into the market through artificial manipulation of bond yields. They effectively purchase their own bonds and in the process hike the price of government bonds, meaning that the financial institutions who sold their bonds to BoE now sit with cash that is then invested in private sector bonds as government bonds are less attractive, and in the process boosting liquidity. The increased activity in the corporate bonds market results in a decrease in their interest components further increasing liquidity and boosting growth. In theory. BoE then sells its bonds once the economy has recovered and squares its cash position in the trades so it is supposed to, in effect, have zero detrimental economic impacts, but it does in terms of inflation.

I think Space Chief is referring to QE money reaching the market now, but that's already happened, so I'm a little foggy on what he's referring to...
 
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DJ...

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Well looking at the charts, the value of the GBP is going up vs the USD during this time. I understand that a lot of that has to do with Printing Money, but SA is doing the same things to try to stave off this tidal wave, the SA economy is just in a much worse place so their QE is not being effective.

We are not in the same position at all. We're not and have not engaged in QE quite like the states and UK. Hardly, in fact. Still not sure what QE SC is referring to here.

This current hammering is a general pull-back from emerging markets with large exposure to China, or whose income is derived from major exports to China at least. Sentiment is weak on emerging markets and this is an expected "contraction" based on poor numbers from China...
 
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