Johannesburg - South African central bank governor Gill
Marcus said on Thursday it would be costly to fight the volatility of the rand
through direct intervention.
Emerging markets are seeing greater exchange rate volatility
as near-zero interest rates in developed economies lead investors to seek
yields in riskier but higher yielding assets.
"So what can be done? Direct intervention is one
option," Marcus said in an opinion piece published by the Financial Times.
"(But) with average daily turnover in the domestic
foreign exchange market of about $16bn, trying to lean against currency moves
would require a lot of costly intervention."
South Africa's gross foreign currency and gold reserves -
which would provide some of the firepower needed to reduce rand volatility -
stood at nearly $50bn at the end of March.
Marcus also said lowering interest rates was not an option
because the inflation rate was already too high in Africa's biggest economy.
The central bank targets inflation of between 3% and 6%.
Headline consumer inflation slowed to 6% in March, returning to the target band
for the first time since November.
The rand gained about 30% on the dollar between 2009 and 2010 but lost about the same amount between August and November last year when it tumbled to a two-year low.