ANC moots mining wealth fund to curb currency

2012-02-08 14:50

The ANC is considering starting a sovereign wealth fund from proceeds of a proposed new mining tax that could be used to intervene in the market to cap gains in the rand in times of a commodity boom.

Such a move would be a departure from the current policy under which the South African Reserve Bank does not actively intervene in the market to target a level for the rand’s exchange rate.

A study on mining sector reforms submitted to the ANC proposed the introduction of a “resource rent tax (RRT) of 50%” on all mining.

“The RRT proceeds should ideally be kept in an offshore Sovereign Wealth Fund to ameliorate the strengthening of our currency during commodity booms,” it said.

Manufacturers blamed the currency for poor export performance when the rand gained about 30% against the US dollar in the two years to end 2010.

The rand subsequently lost about 20% last year but manufacturers have previously said they would like the currency trading at around R8.50 to the US dollar, compared to R7.55 to the US dollar today.

The rand is a heavily traded currency that is given to wild swings in line with changing investors’ sentiment.

Gross foreign exchange reserves of $51.45 billion (about R389 billion) at the end of last month do not give the central bank enough firepower to have an impact in the foreign exchange market in which more than half of trades on the rand are offshore.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/Sport

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.