## Exchange Rate Volatility and Pass-Through to Inflation in South Africa

_IMF Working Papers, December 13, 2019_

## Source details

**Canonical URL:** [Exchange Rate Volatility and Pass-Through to Inflation in South Africa](https://www.imf.org/en/publications/wp/issues/2019/12/13/exchange-rate-volatility-and-pass-through-to-inflation-in-south-africa-48822)

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## Bibliographic details
- Authors: Ken Miyajima
- Published: December 13, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513521572.001

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### Overview and research question
- Title: Exchange Rate Volatility and Pass-Through to Inflation in South Africa
- Author: Ken Miyajima
- Publication date: December 13, 2019
- Series: Working Paper No. 2019/277
- Issue: 277
- Volume: 2019
- Pages: 27
- DOI: https://doi.org/10.5089/9781513521572.001
- ISBN: 9781513521572
- ISSN: 1018-5941
- Publication type: IMF Working Papers

### Core findings
- The study extends a standard estimation technique of exchange rate pass-through (ERPT) to inflation by incorporating exchange rate volatility.
- Estimated results suggest that higher exchange rate volatility tends to increase core inflation.
- The impact of exchange rate volatility on core inflation is described as relatively limited in South Africa.

### Policy implications and recommendations
- The findings lend support to the policy of allowing the rand to float freely.
- Allowing the rand to float supports its role as a shock absorber.
- The results are presented as consistent with South Africa’s successful inflation targeting regime.

### Subjects and keywords (as listed)
- Subjects: Depreciation, Exchange rate pass-through, Exchange rates, Foreign exchange, Inflation, National accounts, Output gap, Prices, Production
- Keywords: Africa, core inflation, Depreciation, ERPT terms, Exchange rate pass-through, exchange rate variable, exchange rate volatility, Exchange rates, food price inflation, fuel price inflation, Global, inflation, NEER depreciation, Output gap, price, rand volatility, volatility data, WP

*Source: IMF Working Paper — Ken Miyajima, "Exchange Rate Volatility and Pass-Through to Inflation in South Africa", Working Paper No. 2019/277 (December 13, 2019).*

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_Source: https://www.imf.org/en/publications/wp/issues/2019/12/13/exchange-rate-volatility-and-pass-through-to-inflation-in-south-africa-48822_