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Johannesburg - The rand's recent bout of weakness is "overdone" and will affect inflation‚ the Reserve Bank's governor Gill Marcus said on Friday.
The currency weakened to a near four-year low at R9.18 to the dollar on Thursday and was trading at R9.11 to the dollar this morning.
It has been the worst-performing emerging market currency this year‚ depreciating by more than 7% against the dollar.
"In our view this is overdone. It will over a period of time retrace back to a more reasonable level‚" Marcus said. She was speaking to Bloomberg at Cernobbio‚ Italy at a conference on "The Outlook for Financial Markets‚ for their Governance and for Finance."
Marcus said that higher food and oil prices were the main factors driving inflation‚ which was expected to breach its official 3% to 6% target range this year.
"Obviously currency weakness will impact on that as well‚" she said.
Some analysts believe that at least in the short term‚ the rand will weaken further to trade between R9.20 and R9.25 against the dollar.
The currency has been affected by worsening unrest in the mining sector‚ which have reduced output in mining‚ SA's biggest export earner.
