How do exchange rates affect the South African economy?

-A weak exchange rate will make imports more expensive and hurt consumer spending and saving; if this occurred in a vacuum (it never does) GDP would decrease. The exchange rate will decrease relative costs of exports. If our exchange weakens dramatically, say 1$=R20, people earning dollars will notice how cheap South African goods are. read more

Cape Town: Economic Research Southern Africa. 3. BIS. 2016. The South African rand is the 18 th most traded currency in the world even though the size of the economy is 33 rd in the world. 4. Arezki, R., Dumitrescu, E., Freytag, A. & Quintyn, M. (2012). Commodity Prices and Exchange Rate Volatility: Lessons from South Africa’s Capital Account Liberalization. IMF Working Paper, WP/12/168. 5. read more