Wits Business School (ETDs)

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    An investigation of the causes of South Africa’s rising inflation from 2007– 2023
    (University of the Witwatersrand, Johannesburg, 2024) Ndou, Phumudzo Faranani
    The paper investigates the causes of South Africa’s inflation from 2007-2023. Thereport finds that labour costs, import prices and the exchanges rate are positivedeterminants of inflation. The report finds that labour unit cost is still the biggestcontributor to inflation. The report futher finds that inflation targeting must beemployed together with non-monetary policy measures to be fully effective. The reportrecommends fiscal policy measures such govement price control and policy measures tocontrol wage increases. The report futher recommends that the SARB must be moretransparent in communicating its measures on how it will deal with inflation in thefuture this will enable the Reserve Bank to better control inflation expectations
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    The effect of exchange rate and inflation on the stock market returns of the top mining companies in South Africa
    (University of the Witwatersrand, Johannesburg, 2022) Mangere, Murehwa; Malikane, Christopher
    This research study examines the impact of nominal Rand/USD exchange rate and inflation on the nominal stock returns of top mining companies in South Africa that are listed on the Johannesburg Stock Exchange (JSE). The selected mining companies for this study formpart of the FTSE/JSE Precious Metals and Mining Index. The relevant data was collected from Bloomberg over a ten-year period (2010 to 2020). The Johansen cointegration analysis was applied to model the long run relationship between inflation, exchange rate and stock market prices for JSE Precious Metals and Mining Index. The study outcome revealed that, in the long run, there is a negative and significant relationship between inflation and the stock market returns. Exchange rate has a negative, though insignificant, impact on the stock market returns for FTSE/JSE Precious Metals and Mining Index in the long run. The outcomes of this study pose important implications, from both a policy and practical perspective. Based on the findings, it is recommended that from a policy perspective, the inflation policy must minimise and stabilise inflation fluctuations. This will result in investor confidence and more investments can be made to revitalise the precious metals mining sector. Furthermore, the findings suggest that exchange rate should be considered at valuation to hedge against currency risk and diversify investments
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    The direct and indirect effect of interest rates on economic growth in Botswana
    (2021) Masole, Mbako
    The study determines the direct and indirect effects of interest rates on economic growth through domestic investment, real exchange rate, inflation, foreign direct investment (FDI), trade openness and human capital. The results of this study will guide the appropriate intervention in the use of interest rates in stimulating economic growth. The study uses a quantitative method with multiple regression analysis. It examines the effects of interest rates on economic growth and domestic investment, FDI, inflation, real effective exchange rate and trade openness from 2004 to 2019 in Botswana. The study is highly reliant on secondary data, and quarterly data is used to run the regressions. The results show that the real interest rate in Botswana has a negative effect on domestic investment and inflation, with domestic investment being statistically significant and inflation not statistically significant. However, it has a positive effect on real exchange rate, FDI and trade openness. FDI and real exchange rate is statistically significant whereas trade openness is stastically insignificant. Real exchange rate and trade openness have a positive effect on economic growth, while domestic investment, inflation, real interest rate and FDI have a negative effect on economic growth. Domestic investment is statistically significant, while real exchange rate, inflation, FDI and trade openness are statistically insignificant. On the path analysis, exchange rate, inflation, FDI and trade openness cannot mediate the effect of interest rates on economic growth, whereas domestic investment mediates the effect of interest rate on economic growth. The study concludes that it is critical for policy makers, when making policy decisions on the monetary policy, to bear in mind the influence of interest rate on other macro-economic factors, and how these subsquently affect economic growth. The use of interest rate did not yield the desired results in Botswana, it is therefore rather recommended to consider the use of fiscal policy to stimulate economic growth.