It never ceases to amaze me how economists and financial experts can always, once a clear trend has emerged, detail how obvious it is. They cannot tell you, six months before the Rand and every other emerging economy’s currency starts weakening, that they will in future, but once it has already happened or is in progress, they can then tell the story with incredible authority and explain why it has happened. They may as well be historians and not economists!

The part that worries me when I read the articles, and I am largely talking about articles in Fortune Magazine, Forbes and Barrons, is that they all say the same thing, and that is with the US Fed indicating that it is going to stop buying bonds and putting money into the economy, money is returning home to America. That means it has been taken out of emerging markets and it has been taken out of emerging markets just on the basis that the Fed is going to start tightening its policy. One can only imagine what might happen once the Fed actually does that and actually starts reducing. They basically say that while the American government has made money available at little or not interest, that money has been used to invest in emerging markets, and now that that trend is reversing the money is going to leave the emerging markets. It is not just the Rand that is affected and India’s currency is down 17% alone this year, and it does mean that we may see levels not of R10,50 but of past R11,00 or maybe R12,00.

On the other hand, we can hope that as usual people react badly to the news, which is now, and when it actually happens there will not be any further developments. That would then allow the currency to stay where it is but if it does not happen we are going to have an absolute horror story of rising petrol prices, striking workers in the mining sector demanding higher salaries, all-round higher inflation, etc, etc. The economists however will, once it has happened, tell us what happened.