A Journal opinion article Essay Example | Topics and Well Written Essays - 750 words - 7

A Journal opinion article - Essay Example n of the FED hinted at reducing asset purchases which currently stand at US$85billion according to ‘The Globe and Mail’ online newsfeed, has made investors to pull out their investments out of the emerging markets and prepare to buy the dollars readying to invest in the US markets (Reuters 2013). Domestic problems have not helped the situation get better; the unrests that have been experienced in the mining industry have worsened the strength of the rand. The closer of Lomnin mines unnerved investors forcing the large pull off witnessed in early may, and with the riots not seeming to end anytime soon and the negotiations still in progress, the rand seem likely to remain on low levels for the coming few months. Another issue that is ailing the south African rand is the widening trade deficit that the country has; according to end of April report, the12-month debt levels had reached a staggering ZAR134 billion which is approximately 6.5% of the country’s GDP. With the strikes in the mines and crisis in the Euro zone where South Africa mainly exports its manufactured goods to, the deficit problems is not likely to go away and with it the current trends in the rand are to be maintained. The import market in South Africa has suffered the greatest blow; importers of good from overseas have been forced to increase prices for their commodities, which have trickled down to the citizens in this middle-income country in Africa. Exporters, who some few years back were lobbying the central bank to weaken the rand have also suffered huge setbacks in their business as they have to pay more to import the heavy machineries that are used in mining and manufacturing industries. The South African chamber for commerce is also not very optimistic about the situation as it reported lower confidence levels in the markets in the last two months. Most of the firms that depend on imports and goods for the high-end consumers have had to cut on their costs that includes laying off