Das neue Südafrika

'SA heading for dictatorship'

2006-05-25

Johannesburg - The Congress of SA Trade Unions (Cosatu) voiced fears on Thursday that South Africa and the African National Congress (ANC) were drifting towards a dictatorship.
"Dictatorship never announces its arrival," Cosatu general secretary Zwelinzima Vavi said in Johannesburg.

"It won't, like drum majorettes, beat drums and parade down the street to announce it has arrived."

Vavi was briefing reporters on the outcome of a Cosatu central executive committee meeting.

"The main concern of the committee centres on signs that we may be drifting towards dictatorship. This appears in the use of state institutions ... in narrow factional fights," he said.

"We see it in the use of sections of the media to assassinate the character of individuals through off-the-record briefings and the leaking of sensitive information in the hands of those charged to investigate crimes."

Cosatu will also investigate the link, if any, between security sector employers and ANC leaders.

Vavi said such a link, if found, "may help explain the apparent indifference of political leaders to the plight of security workers, in contrast to (their) eagerness to condemn them (strikers) at the slightest provocation".

Vavi was briefing the media in Johannesburg on the outcomes of a Cosatu central executive committee meeting which ended on Wednesday.

He said the CEC noted with disapproval that the public debate had focused on violence surrounding the strike, rather than the deplorable conditions in the security industry and other issues that had led guards to strike.

Cosatu called on all workers to support the SA Transport and Allied Workers' Union security industry strike, which is now in its eighth week.

News24/SAPA

Dr. Clive Roffey
May 29, 2006

It appears that one of compulsory attributes for the post of would be President or Prime Minister is So comrade Zokwane, president of the National Union of Mineworkers has, in support of Jacob Zuma, confirmed that the left wing COSATU unions do not "adhere" to Judaic / Christian principles and they "do not listen" to the ten commandments. He specifically referred to adultery. I presume that this also extends to "Thou shalt not steal" and "Thou shalt not kill".

No wonder with such blatantly outdated Marxist immoral precepts South Africa is the rape, AIDS, murder and theft capital of the world.

http://www.321gold.com/editorials/roffey/roffey052906.html

Jacob Zuma is back, commit a crime, wash and go, the Government will forget...

http://www.news24.com/News24/S…0,,2-7-12_1940837,00.html

more....

http://www.news24.com/News24/S…,2-7-1442_1940966,00.html

In death, he was exposed as one of South Africa's most cunning corporate confidence tricksters, a manipulative deal-maker who ran the major companies under his control as if they were his personal piggy bank.

Hier ein Auszug aus den neuen Buch:

When he was not in fitful sleep, Brett Kebble lived his life like a combine harvester running on an oversized tank of jet fuel. No matter the problem, project or person in his path, the Kebble juggernaut rolled on, chewed it up and spat it out, propelling countless shards of junk skyward, eventually to rain down fretfully on the scorched earth he left behind.

One of his greatest pieces of combine harvester art was unveiled on 9 December 2004, when he announced the Orlyfunt black economic empowerment (BEE) deal. By that juncture, Kebble had cultivated a R5-million-a-month spending habit. He was flying around in some of the smartest private jets in South Africa. The larger of the pair, a Gulfstream II, carried a $16 million price tag. The smaller Bombardier Learjet 45 was a snip at a mere $6 million. The aircraft were among the toys that Kebble passed off as his own in order to foster his self-made reputation as one of the most powerful businessmen in the land. He had invested countless millions in creating his public image, but woefully little of the story was true. His entourage, which worked tirelessly to promote his profile, was paid partly by him and partly by the listed companies he ran like his own backyard chopshop.

One of the truths was that Kebble was an accomplished pianist; another was that he had powerful political connections. It was also true that he had moulded himself into something of an arts patron by sponsoring a competition that showered cash on starving painters, sculptors and crafters two years in a row, though contrary to popular belief, the money did not come out of any personal Kebble pockets. This alone might explain why the highly publicised 2006 Kebble Art Awards, already at an advanced stage when the founder died, were cancelled with unseemly haste by his family.For the most part, the rest of what scriptwriters and actors refer to as 'the back story' had been spun and twisted and contorted so often and so consummately that almost no one questioned any of it. Even mainstream media watchdogs rolled over and became bedazzled, bemused lapdogs, panting about Kebble's self-invented reputation as a mining magnate so faithfully that, while he lived, it remained all but unsullied by the bald truth.

And the truth is that Brett Kebble, gunned down at the age of 41, was one of the sharpest confidence tricksters the South African investment community has ever hosted.

Kebble, apparent man of wealth and taste, was a slick con man with the instincts of a street fighter and an imminent willingness to apply them. He had a black heart and a dark soul and, at some point in his life, he had decided that he would play by his own rules. By the time the Orlyfunt deal came around, Kebble was a truly desperate man. His days were spent frenetically nurturing his BEE connections and the political obligations they carried. He was also involved in numerous attempts to rescue his faltering empire, built from the start on sand - or the powdery dust of the mine dumps that had surrounded Johannesburg before advanced technology and urban sprawl conspired to demolish them.

Kebble was in dire financial straits. Since 1996, when he pulled off some of the most agile acrobatics any stock exchange has ever seen, he had been cash-starved.

He had assets and control and wads of paper to prove it, but his pockets, never deep, were empty. After seizing control of a vast array of assets in 1997 - of which only one, Western Areas, was sound - Kebble had embarked on a massive asset-stripping exercise. In immaculately disguised transactions shot through with spin, he sold off assets - or more commonly, bits of assets - and raised hundreds of millions of dollars. But long before he was forced to invent Orlyfunt, the money was all gone. Fed to media sycophants as a black-owned investment giant run by 'experienced entrepreneurs', Orlyfunt would acquire an extensive portfolio of BEE entities and various mineral right interests for the sum of R1.4 billion from the venerated and long-established JCI.

Nine months later, Kebble would be dead and JCI in disarray, his legacy a convoluted financial travesty that would take months, if not years, to untangle.

From PART I, "Catch me if you can" of Brett Kebble: The Inside Story, the biography of Brett Kebble by Barry Sargeant.

2006-06-01

Cape Town

Stop bitching or get out!

That was Safety and Security Minister Charles Nqakula's message on Thursday to those that he called "constant moaners".

And to those threatening to leave the country because of the high crime rate, the message was: "Get a life!

"There are two options. You can complain until you are blue in the face or leave the country so that the rest of us can get on with our work."

Among those, he said, were the Democratic Alliance's Roy Jankielsohn and Ray King, as well as Pieter Groenewald of the Freedom Front Plus.

Nqakula said during the discussion of his budget vote it was significant that complaints always came from people with surnames such as Jankielsohn, King and Groenewald.

Townships used to fighting crime

"Why don't you hear complaints from township folk?"

Nqakula said the reason probably was because township residents had been fighting crime for years.

"The government you were part of left these people to their own devices when it came to crime.

"Now that you're also on the receiving end of crime, you start complaining.

"That's disgusting!"

Nqakula was clearly annoyed by a DA suggestion that he spend time at home fighting crime instead of trying to broker peace in Burundi.

"This is a clear indication that you don't understand politics at all.

"It makes sense that the president sends his safety and security minister to help our friends in other countries.

An even-bigger crime problem

"If we don't help, their citizens will inevitably end up in South Africa.

"And if they come here and there's no work? Nowhere to stay and nothing to eat?

"What then?

"Then we'll have an even-bigger crime problem.

"If you don't understand this, then you shouldn't be here!"

News24/

Pressure mounts to hike rates

2006-06-07

Cape Town

Trade union Solidarity warned on Wednesday that consumers should heed all calls to reduce their debt burden, since there is great pressure on the Reserve Bank to increase interest rates.
The warning comes ahead of an interest rate decision on Thursday and amid surging retail sales data released earlier on Wednesday.

Statistics SA reported that South Africa retail sales - the main measure of consumer demand - rose by 10.9% in March, accelerating from 10.3% in February. This was the biggest annual retail sales growth since October 2004 when a rise of 12.2% was recorded, reports Reuters.

Economists reckon the bank will leave its repo rate unchanged at 7%, but have not ruled out a pre-emptive hike of between 25 and 50 basis points when the meeting ends on Thursday.

"These numbers would tie in with other figures such as the credit numbers confirming that domestic demand ... remains fairly robust in this economy. Given what the currency has done, the risk of a surprise hike is increasing," Adenaan Hardien, economist at African Harvest, told Reuters.

Solidarity's economist, Lullu Krugel, said the recent weakening of the rand and pressure as a result of the oil price will undoubtedly exert great pressure on inflation.

"To date the economy has coped well in absorbing the shock of increased fuel prices and its secondary effect on other prices, and inflation figures remained favourable.

"However, some inflation rate components, mainly food prices, have in recent months begun increasing sharply from very low levels.

"The MPC will certainly take these factors into account, in addition to others like the growing deficit on the current account of the balance of payments and the possible effect of the weaker rand in inflation."

Fin24 columnist Greta Steyn, however, wrote should the Reserve Bank's Monetary Policy Committee raise rates, it would be admitting that the rand is nosediving.

She wrote: "If the Reserve Bank's MPC raises interest rates on Thursday, it won't be on the grounds of inflation threatening to break through the 6% upper limit of the inflation target.

"The Bank can't use the current account deficit as a reason for hiking rates, as its mandate is to fight inflation, not to guard against balance of payments imbalances.

"It is only allowed to worry about the current account deficit to the extent that this will affect the rand and hence inflation.

"At the moment the Bank's hands are tied - and if it tries to tell you otherwise on Thursday, it will be pure spin doctoring. If, however, the rand is trading above R7/$, it may have a point," Steyn wrote.

Read the full story here.

On Tuesday, the South African Chamber of Business (Sacob) urged the Bank to increase the repo rate to avert a possible current account crisis.

"The accumulated deficit on the trade account (goods) of the balance of payments for the first four months of 2006 amounted to R17.1bn compared with R4.9bn for the same period last year.

"This gives an indication that the deficit on the current account (goods and services) may become a bigger problem than anticipated..." Sapa quoted Sacob as saying.

Krugel said that there is a great likelihood of interest rates being increased now, despite market expectations of it happening later during the year.

"Increased interest rates are obviously not bad news only. It is good news, for instance, to retirees who are dependent on investment income.

"I also do not expect an interest rate increase now to result in a dramatic upward spiral. A 150 basis point increase across the total upward cycle, as predicted for the foreseeable future, is more or less to be expected.

"Movements are also likely to occur in increments of 50 basis points."

Cape Town - The Reserve Bank monetary policy committee on Thursday announced a surprise 50 basis points increase in its repo rate to 7.5%, taking the prime lending rate to 11%.
The repurchase rate is the rate at which the Reserve Bank lends money to commercial banks.

The announcement comes as pressure mounted for the Bank to raise rates amid a weakening rand and a possible current account crisis.

6.79 R/USD 8.59 R/Euro

Gute Nachricht für die SA-Minen. Wenn's denn dabei bleibt, wird jetzt wieder gutes Geld verdient.

Posted to the web on: 20 June 2006
Rand crosses R7/$ threshold
I-Net Bridge
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Rand flirts with R7/$, gold dips

THE rand broke above the key R7 to the dollar level for the first time in over two years early this morning driven by continued dollar strength as well as weakness in emerging market high yielding currencies. Exporters were not yet in the market to cap the rand’s losses.

In early trade, the rand was bid at R7,0124 per dollar from an overnight close of R6,9776. It was bid at R8,8269 to the euro from a previous R8,7936 and at R12,9250 against sterling from yesterday’s R12,8400.

The euro was bid at $1,2579 from $1,2573 late yesterday, while gold was quoted at $570,95 a troy ounce from a previous $565,60/oz.

ETM market analyst George Glynos said that the rand was being driven by the same factors as yesterday, namely weakness in emerging market currencies and a strong dollar. While off their lows, soggy commodity prices were also playing a role. He said that commodity currencies had been on the back foot earlier this morning due to lower commodity prices.

While they had since bounced in line with commodities, they were still on a weaker trend and commodities were seen retreating further in the next few weeks.

"I don’t think exporters have come into the market in a big way yet. Late morning, we can expect exporter activity to pick up," he said.

"As levels above R7 become more entrenched, we can expect to find exporters taking advantage."

Glynos said that given today’s lack of data or events, it was likely to be a consolidative session, with the rand trading in a R6,97 to R7,05 range.

Wenn man die Entwicklung des ZAR in den letzten Wochen verfolgt scheint dieser nun endlich gen Süden zu gehen.....grösstenteils unbemerkt....das ist Wasser auf die Mühlen von GFI, HMY und Co.
Sollte es sich hier tatsächlich um eine Trendumkehr handeln werden die SA Minen zu den Top Performern der nächsten Zeit zählen; es ist bestimmt kein Fehler hier mit dem aufbau einer Strategischen Position zu beginnen so man sie nicht schon hat

Das Szenario eines fallenden Rand in Union mit einem steigenden Goldpreis wurde ja schon leidlich diskutiert trat aber nie ein....es sieht so aus als ob dies Konstellation langsam aber sicher in die pötte kommt....

Gruss

@ Valueman

Sehe ich auch so.
So schnell habe ich den Rand noch nie fallen sehen. Es sieht fast so aus, als wären die Spekulanten raus gegangen (muss mal den nächsten Bericht der Notenbank abwarten).

Soviel kenne ich als Einflußfaktoren:
man erwartet eine Abschwächung des Wachstums (zwischen 4-5 % statt 6 %) und eine Erhöhung der Inflationsrate (so um die 6 % statt 4-5 %). Das drückt den Speks gleich aufs Gemüt.

Ich sehe so langsam Licht am Horizont für die SA-Minen.

Kuddel

Wir werden einen typischen "Flaschenhalseffekt" sehen. Wenn die Anleger sehen, dass die anvisierten üppigen Zinsgewinne von den Währungsverlusten aufgefressen werden, gehen sie alle raus; von den automatisierten Handelssystemen ganz zu schweigen....dann ist L(R)and unter und die SA Minen werden sprunghafte Gewinnanstiege verzeichnen können....der Mensch ist ein Herdentier...

Gruss

Jetzt wird auch langsam Mboweni wach.

Mboweni hints at rates hike

By Gordon Bell

South Africa's deficit on the current account widened to its worst level since 1982, data showed yesterday, knocking the rand to a 2 1/2-year low and suggesting that interest rates will have to rise again.

Mboweni said he was "concerned" about the shortfall on the country's broadest measure of trade, which swelled to 6.4 % of gross domestic product (GDP) in the first quarter from 4.5% in the previous quarter.

Strong domestic demand, robust credit growth and high oil prices all conspired to boost imports and push the current account deficit to a record R103.1 billion in the first quarter, the bank's June quarterly bulletin showed. That news knocked the rand 3.5% lower to 7.41/dollar - its weakest level since January 16, 2004.

Its rapid descent backed perceptions inflation would climb, forcing the central bank to raise interest rates again after its surprise decision to hike its key repo rate by half a percentage point to 7.50% on June 8.

"There may be some major inflationary consequences down the road and strong import demand may also have some unintended consequences for domestic production," Mboweni told parliament's finance committee.

"Which means that something is wrong in the economy encouraging all this conspicuous consumption that is taking place ... and that thing that might be wrong is that money is too cheap."

Bank shares tumbled more than 3% while some retailers dived by 3.6%. Government bonds also took a beating, with yields on the most traded R153 bond due 2010 climbing by 14 basis points to 8.23%.

"My feeling is that more interest rate hikes are on the cards, the central bank has no choice ... the trend is in place, further rand weakness lies ahead," Brait economist Colen Garrow said.

Concerns over the ballooning current account gap had already piled pressure on the rand during a rout of emerging market currencies over the past month, which knocked the unit about 15% weaker in the year so far.

To date the deficit has been amply covered by inflows on the financial account, but a drop in foreign buying of domestic equities over the past month has fuelled concern there will be less support from that area.

During the first quarter of 2006 capital inflows - particularly portfolio investments into domestic equities - continued to finance the current account shortfall, the central bank's bulletin showed.

But other data highlighted South Africa's deteriorating export performance, which has been blamed on sustained strength in the rand currency after its descent to a record low of 13.85/dollar in December 2001.

In volume terms exports fell by 5% in the first quarter of 2006, while imports rose by 3.5%, matching an "accelerated pace" in domestic spending.

"We still see significant inflows into the economy which finance the current account deficit," Mboweni said.

"(But) I'm still concerned (about) a current account deficit of more than 6% of GDP ... There is an imbalance here."

Mboweni highlighted high levels of household debt, which jumped to a record 68% of disposable income in the first quarter of 2006 from 65.5% in the fourth quarter.

Economists said the trade backdrop and current account deficit was likely to improve as the weaker rand boosts the competitiveness of domestic exports.

"This could translate into a need for further monetary
policy tightening in the near term," Absa economist Monale Ratsoma said.

"However the recent depreciation in the rand could support exports and result in an improvement in the trade balance."

Published on the web by Cape Times on June 23, 2006.

Der Rand fällt wie eine von den Jakobinern geschärfte Guillotine. Solange das der Fall ist, wird der Randsturz die positiven Effekte auf die Goldminen konterkarieren.
Ursache sind vermutlich die kollabierenden Carry-Trades. Im Moment also noch abwarten. Wo Aas ist, sammeln sich die Geier. Laßt uns noch eine Weile kreisen.

Auch das noch, IMO die Fussball WM findet in RSA nicht statt bei der Entwicklung in RSA.

Gas crisis in SA

2006-07-26

SA is facing a gas crisis

Cape Town - A gas crisis was looming after three of the biggest suppliers of gas admitted that essential maintenance work and an increased demand had led to a "national shortage".
The problem was revealed shortly after maintenance work at Koeberg's Unit 2 had been finalised. As part of Eskom's power saving measures, people were encouraged to buy gas heaters and stoves.

The gas shortage might be resolved within a few weeks, said Chris Fieldgate, spokesperson for Afrox, on Tuesday.

According to Eric Mouton, owner of a filling station at Langebaan, Totalgaz had informed them by letter on Monday about "a national shortage that was influencing the whole LPG (liquid petroleum gas) industry".

Totalgaz wrote that its refinery would be closed at unscheduled times as a result of technical problems experienced by the company.

"They (Totalgaz) gave us permission to buy gas from any other supplier (despite the agreement between supplier and client). There are about 30 restaurants in the area who make use of gas and they will now run dry."

Cold weather

Mouton said they haven't had gas in supply for the past two weeks and were battling to get hold of any.

"Smaller towns, like Moorreesburg and Velddrif, where less gas is used, still had a bit of old stock. But all the nearest big towns are dry."

"Many people switched to LPG during the power crisis, but now it is a huge problem," said Mouton.

According to a statement by Afrox four factors led to the emergency experienced in several places in the country since May:

exceptional cold weather and an early winter;
the closing down of the Engen refinery in KwaZulu-Natal for annual maintenance;
the Sapref refinery (in Durban) was producing less than the expected volume; and
the electricity crisis had increased the demand for gas equipment.
"The cold weather created an exceptional demand for LPG, which is not decreasing. This is hampering all efforts to normalise the supply situation," said Afrox.

A three-day strike last week at Sasol over wages also added to the problem.

According to Fieldgate there had been a definite increase in the use of gas since last year.

Backlog in LPG products

Orders from the industry increased since last year. This increase was seen especially in the consumer market, which mainly use 9kg cylinders for heating, cooking and lighting.

He said there was a backlog in the supply of LPG products. This backlog was difficult to make up. "Afrox was selling every available kilogram of the product, but there were just not enough rail and road tankers to transfer it from the refineries at the coast to the inland sites," read the statement.

The Chevron refinery in Milnerton announced on Tuesday that it was limiting the supply of gas in order to build up stock for essential repairs, which would be done soon. Its clients were also informed about the rationing of the volumes of gas to be sold, said Chris Viljoen from this refinery.

According to a statement a unit that manufactured hydrogen and high-octane petrol components and which was essential for the purification process, would be switched off for three weeks from August 1.

"Although the repairs do not influence the whole refinery, it will be operating below the normal production levels. Chevron has contingency plans in place to prevent that it influence the fuel supply."

News24/Die Burger

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=91032

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=91029

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=90984

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=90986

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=90817

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=90847

Gut für die SA-Minen.

siehe Link:

http://www.faz.net/s/Rub58BA8E…Tpl~Ecommon~Scontent.html

No wonder !

...

South AfricaCrime 'a major problem

'2006-08-23

South Africa has acknowledged that the country's crime rate is a major concern ahead of the 2010 soccer World Cup. Cape Town - The government on Wednesday acknowledged that the country's crime rate was a major concern ahead of its hosting of the soccer World Cup in 2010.

Patrick Matlou, deputy head of the national tourism department, told lawmakers during a briefing on preparations for the tournament that a detailed survey of crime-fighting technology was already under way in a bid to allay fears.

"As South Africa, we recognise this is a major problem ... both at a perception level and at a reality level," said Matlou.

"The challenge ... is to ensure that we overcome these issues, both at a marketing level and by ensuring that people are safe, feel safe, when they come here."

National crime statistics showed that nearly 19 000 murders were reported in the country of 47 million over 2004-2005, a 5.2% drop from 2003/2004.

South Africa has one of the highest rape statistics worldwide - more than 55 000 cases were reported by police last year.

President Thabo Mbeki has expressed his irritation at media reports which have questioned the safety of South Africa as a World Cup venue.

Matlou told MPs that about 445 000 foreign tourists were expected to flock to the country for the tournament - the first time that it has been staged in Africa.

Total revenue was expected to top R11bn, he added.

No wonder !

CrimeExpo: 43,000 Murders in S.Africa Annually

Interpol is the source of this figure.. The SA gov't says 19,000 murders each year

..

South AfricaCrime 'a major problem

'2006-08-23

South Africa has acknowledged that the country's crime rate is a major concern ahead of the 2010 soccer World Cup. Cape Town - The government on Wednesday acknowledged that the country's crime rate was a major concern ahead of its hosting of the soccer World Cup in 2010.

Patrick Matlou, deputy head of the national tourism department, told lawmakers during a briefing on preparations for the tournament that a detailed survey of crime-fighting technology was already under way in a bid to allay fears.

"As South Africa, we recognise this is a major problem ... both at a perception level and at a reality level," said Matlou.

"The challenge ... is to ensure that we overcome these issues, both at a marketing level and by ensuring that people are safe, feel safe, when they come here."

National crime statistics showed that nearly 19 000 murders were reported in the country of 47 million over 2004-2005, a 5.2% drop from 2003/2004.

South Africa has one of the highest rape statistics worldwide - more than 55 000 cases were reported by police last year.

President Thabo Mbeki has expressed his irritation at media reports which have questioned the safety of South Africa as a World Cup venue.

Matlou told MPs that about 445 000 foreign tourists were expected to flock to the country for the tournament - the first time that it has been staged in Africa.

Total revenue was expected to top R11bn, he added.

Cape Town - Almost half of the rapes in Cape Town's Khayelitsha township involved girls under 14, with the youngest survivor aged one and the oldest a grandmother aged 76, according to data from a dedicated rape centre on Wednesday.
In its first-year report - August 2005 to July 2006 - the Simelela Rape Survivors Centre treated 743 cases, an average of two to three a day.

The area is recognised as having one of the highest rates of rape in South Africa.

Armed robbers hit Jhb airport - again

2006-08-29

Johannesburg Airport has again been targeted by armed robbers - this time a gang broke into cargo sheds and stole an undisclosed amount of electronic equipment. Johannesburg -

The Johannesburg Airport was robbed again.

According to Karin Duncker, a spokesperson for the German airline Lufthansa, a group of armed men broke into the airline's cargo sheds shortly after midnight on Monday. An undisclosed amount of electronic equipment was stolen.

Rand worst performing currency

2006-08-29

The weakness in the rand is adding to woes that the Reserve Bank is expected to hike interest rates even further at its next MPC meeting next month.

Cape Town - Reasons to hike rates are becoming more compelling, with the weakness in the rand adding to woes that the South African Reserve Bank is expected to tighten monetary policy even further when its MPC meets next month.
Since the beginning of the year, the rand already lost 11.5% of its value against the dollar.

Late on Monday, the unit stayed close to a five-week low against the dollar at R7.1755/$.

The downtrend was expected to continue ahead of the inflation data due to be released on Wednesday and Thursday. The rand earlier on Monday slipped to R7.21/$ - its weakest level since July 19, according to Reuters data.

Garrow cautions that the risk contained in hiking rates is a fragile one.

"On the one hand, the central bank must slow consumption expenditure sufficiently to reduce the imbalance on South Africa's external accounts.

"On the other hand, hiking interest rates suggests slower economic growth, and an erosion in the financing of the current account deficit."

Garrow says non-residents who had been prolific purchasers of domestic equities have stalled their interest, interest which had grown in anticipation of brighter GDP growth prospects.

"The problem this creates for the current account is that capital financing for its deficit (-6.1% of GDP in H1 2006) is withdrawn.

"A current account deficit this large adds momentum to speculation that the rand may weaken further, fanning inflationary pressures and adding to calls for rates to be hiked."

However, foreign investors who are lightening their equity portfolios, as part of the risk aversion towards emerging markets, should be reminded that two vital stabilisers to currency volatility are firmly in place, says Garrow.

"The central bank has turned the deficit in reserves around, where the international liquidity position has been reported at some $20bn, a far cry from the forward book of $23bn which existed at the peak of the crisis in global markets in 1998.

"Another important element to the stability in the local currency is the inflation targeting mechanism, with CPIX - due for release on Wednesday - expected to be within its target zone for thirty-five consecutive months," says Garrow.

Garrow expects CPIX to come in at 4.4% in July, from 4.8% reported the previous month. "But, this may not be enough to thwart expectations that the Bank could hike rates by 50 basis points at each of its MPC meetings in October and December."

Garrow says it is significant that the Bank has preemptively taken steps to slow consumption expenditure and improve the current account, rather than to respond belatedly to inflation which threatens to breach the upper end of the inflation target range.

But, the risk is a fragile one - that too much monetary tightening may threaten GDP growth and prompt some foreign disinvestment from equities.

News24/Finance24