Answer to Question #251776 in Macroeconomics for viks

Question

an appreciation of the rand against the dollar would lead to what

Answer 1

An appreciation of the rand against the dollar would lead to decrease in South Africa's exports to the United States and worsen the South African current account balance. This is because if rand is appreciated then it will be more expensive for Americans to import from South Africa and therefore there will be a decrease in export from South Africa. In addition, there will be more money in market because South African bank will buy large amount of foreign currency and this will worsen the South African current account balance.