Exporters may be rubbing their hands in glee at the news that the rand was nudging R11 to the US dollar in overnight trading, but anyone buying imports will be counting on the optimism of economists predicting that this may be short-lived.

After a tumultuous night where it cost up to R10.82 to buy one dollar, as investors became panicky and started moving funds into gold or anything perceived to be risk free, the South African currency started recovering on Thursday morning.

ETM economist Russell Lamberti said that it was at a welcome R10.20 after 9am but volatility was extremely high. Overseas markets took a knock on Wednesday in a week that has been marked by the dramatic ups and downs accompanying the bailouts by governments of banks.

Lamberti said that South Africa’s internal politics should not be playing too much of a role as the country was relatively politically and socially stable. Much of it could be attributed to panic and a lack of global liquidity as investors moved their Funds back into overseas government bonds, gold, or anything they currently considered less risky.

Currency traders would have also been bailing out of long rand positions as they were squeezed out of their positions. There might also be a touch of emerging market and Afro-pessimism involved, while traders would also have feared a repeat of the 2001/02 rand blowout he said. However, as in 2001/02, a big sell-off could be followed by a big buy-in as foreign investors find weaker emerging market currencies very attractive and South African assets a bargain.

Should this weakness be sustained however, export sectors like metals will benefit from a higher rand price of exports, but that is mitigated by assemblers having to pay for imported parts in manufacturing sectors. Oil prices were continuing to fall so there would probably not be petrol price hikes just yet unless a sharp OPEC production cut or geopolitical tension were to cause oil prices to rocket back up toward the $100/bl level.

But if firms working on big projects like Gautrain needs to buy a new tunnel borer, for example, these kind of big-ticket imports for infrastructural development will cost considerably more.

“The rand is sometime seen as the whipping boy of the emerging market currencies and unfortunately there is very little we can do to stop this unless SA really makes a concerted effort to beef up it productive capacity and increase exports considerably,” he commented.