Over the past decade, fluctuations in the South African rand seem to have been driven primarily by changes in global risk appetite. But while risk appetite has improved over the past six months, the rand has weakened, and has in fact been the worst performing major EM currency. This reflects the fact that local factors, such as labour unrest and a widening current account deficit, have been weighing on the currency. We expect the rand to remain weak throughout the rest of 2013.
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