Currency risks are a threat to South Africa’s plans to import LNG, as they make the fuel expensive and project financing difficult.
The exchange rate between the United States dollar and the South African rand has averaged 14.7 so far in 2016 – an increase of almost 15% on an annual basis. Tighter monetary policy by South Africa’s central bank has reversed some of the rand’s weakness against dollar, but the move is restricting the country’s growth. Meanwhile, allegations of government corruption are weighing on business confidence.
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