South African Rand settles down in 2005

As 2005 draws to a close, currency traders are taking a collective step back, in order to asses the performance of forex markets. Among the biggest losers, surprisingly, is the South African Rand. Having nearly doubled in value against the USD from 2001 through 2004, the Rand has depreciated 12% against the USD through December. The silver lining, as far as economists and fundamental analysts are concerned, is the marked decrease in volatility surround trading in the Rand, due largely to an increase in liquidity. Rand bulls are already looking to 2006, when GDP growth is expected to exceed 5% on the heels of strong capital inflows and high commodity prices. Reuters reports:

Deepening liquidity also points to growing confidence in an economy which most analysts agree has been well-managed -- especially by emerging market and African standards.

Read More: Has S.Africa's wild rand finally been tamed?