* Importers jack up prices as rand plunges
* Even South African exporters bemoan weak rand
* Possible Fed shift affects millions from Brazil to Poland
By Stella Mapenzauswa
JOHANNESBURG, June 7 When South Africa's rand
tumbled to a four-year low, black market currency dealer Valeria
raised a quiet cheer; a trip to the wholesaler where she buys
clothes for her above-board business brought her back to earth.
Valeria, who runs a stall in Johannesburg's bustling
Randburg area, naturally rejoiced at the rand's misfortune last
week as it increased the value of her illicit stash of dollars.
The problem is that overnight the Chinese wholesaler joined
fellow sellers of imported goods in jacking up his prices in
rand, reacting to the plunging local currency.
"I'm back to square one," Valeria, who did not want to give
her surname, told Reuters. "In fact, I'm worse off because
trading forex is only a small part of what I do. The clothes are
my main source of income."
Valeria is not alone. In emerging markets as diverse as
Brazil, Poland and Indonesia, millions of people and businesses
from street hawkers to luxury retailers face turbulent times.
This is all because far away in Washington, the Federal
Reserve is starting to think about scaling back its
"quantitative easing" programme for boosting the U.S. economy.
The scheme, an $85 billion-a-month bond-buying programme,
has pushed U.S. interest rates close to zero, encouraging
investors to divert trillions of dollars into high-yielding debt
denominated in currencies such as the rand.
Even before the U.S. central bank unwinds the programme,
huge sums are flooding back into dollars as investors anticipate
higher U.S. rates and flee the emerging market currencies that
they themselves helped to push up, and are now undermining.
All this is affecting lives and livelihoods around the
world. Central bank governors such as South Africa's Gill Marcus
describe the gyrations in technical terms such as "currency
overshoot" or "disorderly markets".
For Kenny Dzimba, a Zimbabwean living in South Africa, the
problem is clearer. Zimbabwe has ditched its worthless currency
for the U.S. dollar and Dzimba lost five percent on one transfer
because he delayed sending the money home for just two days.
Under exchange control rules, such transfers have to be made
in dollars. Rand also circulate in neighbouring Zimbabwe but
retailers there are raising their prices in the South Afican
currency as it slides against the dollar.
"I guess, you snooze, you lose," Dzimba said with shrug
after reading his transaction slip at a Johannesburg branch of
the Western Union money transfer company.
South Africa has a number of home-grown problems also
undermining the currency, such as unrest in its vital mining
industry. But while the rand is fluctuating, its overall
weakness is putting pressure on everybody from flea-market
traders selling wigs imported from China to up-market retailers
in the malls of Johannesburg's Sandton financial district.
"The rand is making a huge impact on our business," said
Aimee Sadie, the 28-year-old manager of Desche, a family-owned
luxury shoe and clothing store where sales are down 80 percent
from this time last year.
"This month we have hit a record low and had to actually get
rid of staff members," she said. "Everybody is having a tough
time. You can see it just in the mall - there are a lot less
people shopping and spending."
Even exporters - who two years ago were lobbying the South
African Reserve Bank to weaken the then strong rand - are
groaning at the cost of imports such as heavy machinery.
"Be careful what you wish for," financial columnist David
Gleason wrote in the Business Day newspaper. "Manufacturers kept
on bleating that what those in the export game needed was a much
weaker currency ... they wanted the rand to march to their
rescue. Well, it has, and now they're moaning."
Manufacturing accounts for about 15 percent of South African
output, but it is struggling to recover after weak domestic and
global demand pushed Africa's economic powerhouse into a
recession in 2009, the first since the end of apartheid in 1994.
Factory output fell 2.2 percent in March on top of a
slightly larger contraction in February.
The problems are starting to show up in company accounts.
South Africa's second-largest drugs firm, Adcock Ingram
, reported a 5 percent drop in first-half profit this
week, hit by the weaker rand and consumers saving money by
opting for cheaper medicines.
Producers are pessimistic about prospects this year, with
the South African Chamber of Commerce and Industry reporting a
dip in business confidence last month amid fears of more
turbulence in the mining sector.
"We have got a series of very negative issues impacting
simultaneously and sending a very strong message that all is not
well in our economy," the chamber's chief executive Neren Rau
told Reuters. "I'm sceptical about the capacity of exporters to
take advantage of the weaker rand right now because they are
under too much cost pressure."
Food distributor Tacoma Foods, which imports confectionary,
beverages and dairy products for supermarkets, is trying to hold
onto its remaining 30 workers after being forced to cut jobs in
April - bad news in a country with 25 percent unemployment.
"Where we were costing products in October last year at
11.50 (rand) to the euro, we are now having to import at 13.00
or 13.20 and that's a huge jump," said chief executive Greg
Balfour, adding that the firm was bracing for higher transport
costs with fuel prices expected to soar in the next few months.
"Nobody should be happy about a weaker exchange rate; that's
just very shortsighted given that we are a net importing
country. A weaker rand is not good for anybody in the longer