Adapt or fail

Since October last year, extreme movements in South Africa's foreign exchange rate have caused offshore hedge funds to exit the market, while dealers have been reluctant to take on risk. Those that remain active have had to adapt their behaviour. By Mark Pengelly

Market turbulence has left a lasting imprint on the South African rand. The bankruptcy of Lehman Brothers on September 15 last year, combined with a chronic liquidity crisis and continued losses on subprime mortgage portfolios, has caused a widespread bout of risk aversion in global markets. Amid an unwinding of the carry trade, international banks and hedge funds have pulled back from the South African currency, which in turn has had an effect on the behaviour of those remaining in the market