Solution to strong rand ‘not simple’

2010-07-07 12:28

While the strength of the rand was “an issue,” solutions were not simple, SA Reserve Bank (SARB) Governor Gill Marcus said today.

The rand is currently trading at around R7.68 to the dollar, but both manufacturing and labour have called for a weaker currency so that the country’s exports become more competitive.

Speaking at a breakfast presentation in Johannesburg, Marcus said it was not possible to have loose monetary policy and loose fiscal policy and a weaker exchange rate.

She said: “This will not translate into a depreciated real exchange rate, rather, it is a simple recipe for higher inflation.”

She added that another issue was the local currency’s volatility.

However, she said that SARB’s policy towards the rand had not changed: “The approach is not different, but the SARB is aware of the rand’s volatility. We will look at the opportunity to build reserves when possible.”

Marcus added that “a wall of money” was moving into emerging markets.

As a result of the levels of yields in the United States and Europe, investors were looking elsewhere for returns and this strengthened the currency.

She said: “The scale of money moving in is very difficult to manage.”

However, she said that South Africa had exchange controls as to money moving in and money moving out the country.

She added that over 40% of the JSE was foreign owned, so important issues arose when dealing with currencies.

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

 
/News

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.