The plot thickens...

Patrick Bond pbond at wn.apc.org
Mon Oct 12 02:01:16 PDT 1998



> Date: Mon, 12 Oct 1998 00:48:17 -0400
> To: lbo-talk at lists.panix.com
> Subject: The plot thickens...
> ECON. QUESTION:
> ...And when Patrick says in this latest LBO that so.Africa's bank threw
> billions at speculators, what is the actual mechanism that is used to do this?

The Reserve Bank governor personally and unaccountably decides to spend SA's hard-won dollars and other hard currencies -- which he is in charge of allocating (the "reserves") -- to buy rands in the local currency market. This undergirds the price of the rand. Momentarily, that is, until enough speculators build up their sales of rands to a critical mass, sometimes through selling short, and drive it much further down.



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