Johannesburg - The global economy is close to another "Lehman-type" event, and South Africa needs to cushion itself by reducing its
dependence on European export markets, South African Reserve Bank Governor Gill
Marcus said on Wednesday.
The rand lost 22% against the dollar in the first three
weeks of September as investors worried about Europe's deepening debt crisis
ditched emerging market assets.
In an article in the Financial Mail magazine, Marcus said
such a rapid decline bore similarities to the fallout from the collapse of
Lehman Brothers in late 2008.
"The response of the markets to the glaring lack of
global leadership and political will to deal with the crisis in a coherent way
is indicative of how perilously close we are to another ’Lehman-type’ moment,
but without the ammunition of 2008," she wrote.
The rand, a deeply traded emerging market currency, hit a
28-month low of R8.4950 on Thursday but has since bounced back to R7.8450, and
should recover further given that the difference between emerging and developed
world interest rates are here to stay, Marcus said.
"In all likelihood, these exchange rate moves represent
an overshoot and may retrace somewhat when risk aversion moderates, given that
the underlying reasons for flows to emerging markets in the first place - abnormally
low interest rates in the advanced economies - are likely to persist."
South Africa's Reserve Bank last week left interest rates
unchanged at three-decade lows, balancing concerns about rising inflation
pressures with those for stuttering growth in Africa's largest economy, which
relies heavily on exports to Europe.
"With growth in the US and Europe likely to remain anaemic for some time, South Africa would do well to diversify its trade ties ... and reduce its dependence on European export markets," Marcus said.