Johannesburg — ONCE upon a time, the rand was often hit hardest because it was one of the most liquid emerging market currencies and traders used it as a proxy for the rest.

This time around, the global rush out of risky emerging market assets into the "safe havens" of yen and dollar has hit a wide range of currencies. And we're keeping some interesting company.

It's some comfort that the rand has fared better than the Icelandic krona and only a little worse than the Brazilian real. That we've been in much the same boat lately as the Australian dollar is respectable enough, if not very cheerful. But how many of us had heard of the Ukrainian hryvna, a currency Merrill Lynch recently classed with the rand as being in crisis?

It certainly felt like a crisis last week as the rand went through R11 to the dollar and R18 to the pound, levels last seen more than six years ago, with Bloomberg reporting that the rand had put in the worst performance over two months of the 16 most traded currencies that it monitors.

But has the rand in fact fared that much worse than other emerging market currencies? And if so, why? The answer to the first question depends, in part, on the time scale one chooses. Where other emerging market currencies have been hit only recently, the rand has been in decline on and off for much of this year. We tend to forget that the rand was at R6,80 at the end of last year. Last week it was touching R11,80. So while there are a few currencies that have done similarly badly in the past two or three months, losing 25% or more, the rand is high on the list of the worst performers for 2008.

ITS ranking shifts from hour to hour right now. But, according to Absa Capital, SA is at 169 out of 178 currencies in terms of performance for the year to date. That's not far behind the Turkish lira, at 167. Though the lira is down 31% for the year to date, that's mainly because it's fallen nearly 28% in the past month; while the rand has fallen a similar percentage over the past month but is down 40% this year . The major reason for that is the extent to which foreign investors have sold out of South African equities and bonds: Absa Capital's Jeff Gable estimates there has been a swing of as much as R100bn in flows from this time last year.

And it's because SA is so dependent on these external flows that its currency has been hit so hard. Global "de-leveraging" is the latest jargon for the squeeze on credit that's happening as the ailing financial systems of the US and Europe cut back dramatically on lending -- and it's because analysts have been looking at what that might mean for emerging market financial systems that those markets have suddenly been savaged in the past couple of weeks. Much of eastern Europe is vulnerable because its banks depend on credit from European parent banks that are in trouble. With its strong (and largely locally funded) banking system and low levels of foreign debt, SA doesn't have that problem. What it has is a large current account deficit that makes it reliant on foreign financing, and therefore vulnerable, particularly at a time when prices for key export commodities (such as platinum) are collapsing. As global investors have fled from anything that looks like risk, the rand has been hit three ways: it's an emerging market currency, a commodity currency and it has a large current account deficit.

So what to do? Sit tight, do nothing, and wait for the storm to pass is the answer for now. SA is the last country likely to intervene to prop up its currency: we have tried that before and the results were disastrous. But ultimately the solutions to the rand's vulnerability are structural ones: SA needs to cut its dependence on foreign funding by reducing its current account deficit. The weaker rand could in itself help to cut the deficit, as might lower dividend and interest payments to the foreign investors that have pulled their funds out. But the deficit will be cut more sustainably only if SA exports more and saves more. There are no quick fix ways of achieving that.

Joffe is senior associate editor.