| Summary: | Bibliography: leaves 81-85. === The rationale for the study is based on the significance of the mining sector and the recent history of the Rand. During the 1990s and the early part of this century, the Rand has often been the subject of speculative attacks. Added to this is the long-term trend of depreciation against the US Dollar. In a world of infinitely mobile capital and increasing globalization, the possibility of more exchange rate crises is very real. This affects the mining industry more than most other sectors because of the fact that the majority of its production is exported and the majority of the capital inputs are imported. The effect a depreciation will have on the sector is therefore critical. In terms of exports, depreciation leads to a higher price for exporters. However, it often also leads to an increase in costs. On the import side, higher prices may not lead to higher revenue as consumers may substitute away from imports as their prices rise. In addition, elasticities of demand and supply change over time. Thus, the end result of a depreciation of the currency on the mining sector trade balance is not straightforward. Under certain circumstances it could be positive or negative. This project aims to find what the end result would be but also to find out why such results occur.
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