![]() The bank's intervention would be to "smooth out unduly large short-term fluctuations" in money-market liquidity and the exchange rate. Sometimes, the Reserve Bank may "intervene" in the market to purchase and sell dollars – if it is in line with monetary and exchange rate policy. The buying and selling rates for dollars, are based on the supply of and demand for dollars in the market at any given time. The exchange rate of the rand is determined by "market forces", according to the Reserve Bank. Who or what determines the exchange rate? This in turn impacts the domestic fuel price. So, if the oil price is $30 per barrel, and if the current exchange rate is R18… essentially, it would cost South Africa a steep R540 to import one barrel of oil. It also has implications for how much we pay for oil. Or some people even buy other currencies so that they can make money – that is to say, you would buy the US dollar with the expectation that if you had to exchange it for rands again in future, you would receive more than what you paid for it. It will help you plan how much you will spend during your time abroad. It's important to know how much the dollar, pound or euro will cost you – especially if you are going to travel to these countries. ![]()
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