There is outrage in South Africa over President Jacob Zuma’s firing of finance minister Nhlanhla Nene – with no explanation offered – this week. Nene was well-respected and one of a few in the government untainted by corruption scandals. The nature of the disagreements between him and Zuma are not known, but speculation has it that it may have been over yet another bail-out needed for the beleaguered South African Airways, or even over the projected capital expenditures for building several nuclear reactors for the national electrical utility company Eskom.
Anyway : all of this had the South African Rand fall to a record low of R16.05 per dollar before improving to R15.76 by 7:04 p.m. in Johannesburg on Friday. I remember a time in 1990 upon my first visit to the USA, when the exchange rate was R2.50 to the dollar. My dad used to explain to us at the dinner table that a higher exchange rate would normally favor local (South African) manufacturers and exporters .. but at some point, imported items would become prohibitively expensive. The current exchange rate cannot possibly be good for the country.