Often times the discussion on how the world will regain its financial stability usually centers on the big countries but the smaller countries are just as affected if not more than the financial powerhouses.
The response of the the larger economies to the financial crisis has caused high levels of liquidity and low interest rates which pushes investors to emerging markets for higher returns.It is time advanced economies considered the effects of excess and volatile inflows in emerging markets.The financial crisis taught South Africa how to deal with volatility.
The currency depreciated quickly in the early days of the financial crisis. It recovered thanks to large inflows in 2009 and 2010 to our equity and bonds markets. While volatility is not new to South Africa’s foreign exchange market … such gyrations are clearly not in the interest of the broader economy.
As we recover from the worst financial melt down ever experience we should at lease come out of it with wisdom on how to treat money.