The Impact of AIDS‐Related News on Exchange Rates in South Africa

Kauffman, Kyle D.; Weerapana, Akila

doi:10.1086/497009

Cited by 7 publications

(10 citation statements)

References 11 publications

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“…• One possible rationale for including the trend term is the growing role of AIDs. Kaufmann and Weerapana (2005) find statistical evidence that the rand reacts adversely to news about AIDs in South Africa. They attribute the strength of the effect to unpredictability regarding long-term business prospects.…”

Section: Estimated Equationmentioning

confidence: 87%

On the Rand: Determinants of the South African Exchange Rate

Frankel¹

2007

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This paper is an econometric investigation of the determinants of the real value of the South African rand over the period 1984-2006. The results show a relatively good fit. As so often with exchange rate equations, there is substantial weight on the lagged exchange rate, which can be attributed to a momentum component. Nevertheless, economic fundamentals are significant and important. This is especially true of an index of the real prices of South African mineral commodities, which even drives out real income as a significant determinant of the rand's value. An implication is that the 2003-2006 real appreciation can be attributed to the Dutch Disease. In other respects, the rand behaves like currencies of industrialized countries with well-developed financial markets. In particular, high South African interest rates raise international demand for the rand and lead to real appreciation, controlling for a forward-looking measure of expected inflation and a measure of default risk or country risk. It is in the latter respects, in particular, that the paper hopes to have improved on earlier studies of the rand.

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Section: Estimated Equationmentioning

confidence: 87%

On the Rand: Determinants of the South African Exchange Rate

Frankel¹

2007

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“…It is not enough simply to add interest rates as a rate of return, and hope for a positive coefficient, because nominal high interest rates in developing countries usually reflect expected inflation, default risk and devaluation risk. One possible rationale for including the trend term is the growing role of AIDS. Kaufmann and Weerapana (2005) find statistical evidence that the rand reacts adversely to news about AIDS in South Africa. They attribute the strength of the effect to unpredictability regarding long‐term business prospects 5 …”

Section: Estimated Equationmentioning

confidence: 91%

“…One possible rationale for including the trend term is the growing role of AIDS. Kaufmann and Weerapana (2005) find statistical evidence that the rand reacts adversely to news about AIDS in South Africa. They attribute the strength of the effect to unpredictability regarding long‐term business prospects 5…”

Section: Estimated Equationmentioning

confidence: 91%

On the Rand: Determinants of the South African Exchange Rate

Frankel

2007

South African J Economics

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This paper is an econometric investigation of the determinants of the real value of the South African rand over the period 1984-2007. The results show a relatively good fit. As always with exchange rate equations, there is substantial weight on the lagged exchange rate, which can be attributed to a momentum component. Nevertheless, economic fundamentals are significant and important. This is especially true of an index of the real prices of South African mineral commodities, which even drives out real income as a significant determinant. An implication is that the 2003-2006 real appreciation of the rand can be attributed to the Dutch Disease. In other respects, the rand behaves like currencies of industrialised countries with well-developed financial markets. In particular, high South African interest rates raise international demand for the rand and lead to real appreciation, controlling also for a forward-looking measure of expected inflation and a measure of default risk or country risk. Copyright (c) 2007 The Author; Journal compilation (c) 2007 Economic Society of South Africa.

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“…On 3 January 1994 the exchange rate was 2.98 USD/ILS, and from 1994 to 1998 the shekel depreciated every year: 1.07% in 1994, 3.88% in 1995, 3 December 2010 the value of the shekel was 3.549 USD/ILS, which means the shekel appreciated 14.7% in comparison to its value at the end of 1998. In the first half of 2011 the shekel continued to appreciate, but by the end of third quarter of 2011 it depreciated slightly to 3.712.…”

Section: Review Of the Political Relations Between Israel And The Palmentioning

confidence: 97%

“…2 Kauffman and Weerapana have shown 'that "bad" news about AIDS has a detrimental impact on the value of the South African Rand'. 3 Zussman et al, in a study of the foreign exchange market from 2000 to 2005, have found that several turning points in the value of the Israeli shekel during the period were associated with both positive and negative changes in the peace process. 4 Other studies have found a relationship between the Middle East peace process and other economic and financial variables.…”

mentioning

confidence: 99%