Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/336005 
Year of Publication: 
2026
Series/Report no.: 
Policy Paper No. 26‐4
Publisher: 
Codera Analytics, Johannesburg
Abstract: 
This paper assesses whether the rand has been misaligned relative to its economic fundamentals compared to the dollar. Using a Bayesian regime‐switching Vector Error Correction model that allows for the drivers of exchange rate movements to change over time, we show that the historical dynamics of the value of the rand can be explained by a small number of macroeconomic fundamentals.
Subjects: 
Exchange Rate Misalignment
Bayesian Error Correction Model
South African Rand
JEL: 
C11
C24
C53
F31
Document Type: 
Research Report
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