Turkey worries rock South Africa, less effect elsewhere

Fears that financial turbulence in Turkey were the first sign of broader problems rumbled markets across the emerging world in August, with South Africa one of the hardest-hit. The country has Africa’s most globally-integrated economy and most easily-traded currency, which make it vulnerable to EM shocks. Indeed, the rand was one of the worst-performing currencies across the emerging world in August. A Turkey-style crisis, however, remains unlikely. South Africa’s external position is more stable and its debt levels are much lower. We revised down our end-year exchange rate forecasts, but expect that the rand’s big falls are now behind us.