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Global demand for diamonds

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Reference no: EM131073522

Question:

There is a large increase in the global demand for diamonds, of which South Africa is the biggest producer. At the same time, the central bank of South Africa cuts the interest rate. Explain (with appropriate diagrams) the effects of the above events on:

(a) The demand for rand (South African currency)

(b) The supply of rand

(c) The exchange rate of the rand against the U.S. dollar

Reference no: EM131073522

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