In recent years, the link between the real effective exchange rate (REER) and exports in
South Africa has weakened. While exports still rise in response to REER depreciations, the
REER-export elasticity is below historical estimates. The literature has put forward a number
of possible explanations, from multi-national supply-chains to muted exchange rate pass-through.
This research explores the role of policy uncertainty in reducing the responsiveness
of exports to relative price changes. We construct a novel 'news chatter' measure of policy
uncertainty and examine how it, paired with other supply-side constraints, can improve our
understanding of export performance. We find that increased policy uncertainty diminishes
the responsiveness of exports to the REER and has short and long-run level effects on export
performance. Finally, we show that a measure of competitiveness that adjusts for uncertainty
and supply-side constraints greatly outperforms the REER in tracking exports performance.