JOHANNESBURG (Reuters) :
HAS THE 'wild child' of the emerging markets finally settled down, or is South Africa's rand just taking a breather?
For much of the past decade, the currency has experienced spec-tacular ups followed by crashing downs.
But as 2005 draws to a close, the currency seems to have finally found some stability - at least by its extremely turbulent standards.
"If you look at the historical volatilities of the rand you'll find that they have declined through the year," said ETM markets analyst George Glynos.
The rand has stabilised in the face of a yawning current account deficit which swelled to a record 72.9 billion rand (US$11.45 billion) in the third quarter of this year from 55.5 billion rand in the second.
"Volatility has certainly reduced despite a widening current account deficit, but capital inflows have been strong and this has helped," said Adenaan Hardien, economist at Cape Town-based African Harvest Fund Managers.
SEDATE STATE OF AFFAIRS
Analysts say there are many related reasons for this comparatively sedate state of affairs, ranging from increased liquidity to rising foreign exchange reserves to the government's management of Africa's largest economy.
And it appears the currency may have finally found a range it is relatively comfortable with, between 6.30 and 6.70 rand to the dollar - an area it has inhabited for much of 2005.
Analysts say increased liquidity has helped the rand find its footing.
