The South African Reserve Bank became the latest EM central bank to respond to the turmoil in currency markets by hiking interest rates today. However, if the decision to tighten was aimed at shoring up the rand, it failed to have the desired effect – at the time of writing the currency has weakened by nearly 2% against the US$ today. With pressure on the currency showing no signs of abating, further rate hikes now seem likely over the coming months.
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