Strength a talking point as rate to the greenback hits 33-month high

2010-10-15 00:00

THE current strength of the rand was one of the major talking points at the third Harvard House/Witness annual investment conference held in Pietermaritzburg yesterday.

The currency hit a 33-month high against the U.S. dollar yesterday, reaching a high of R6,74 to the dollar.

Although there is no telling how the rand will perform against major currencies over the next few months, speakers at the conference noted that the local currency is likely to remain strong in the short term, boosted by massive foreign inflows and a weaker dollar.

The strength of the rand has been a bone of contention in economic and political circles. Cosatu has called for a weaker currency in order to support local manufacturers.

Finance Minister Pravin Gordhan this week said the country wants a competitive currency “over time”.

The currency’s strength has positive and negative spin-offs for the local economy, producers and consumers.

A weaker rand helps exporters in particular.

However, a weaker rand could fuel higher inflation in an economy that imports significant amounts of goods.

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