Rand 'occupying the mind' of govt

Johannesburg - Government has taken no decision on weakening the rand but the matter is under discussion, President Jacob Zuma said on Thursday.

"We have not taken any decision, but those are matters we are looking at," Zuma said at a press conference held in Pretoria. "Even economists don't have one view on the matter."

Zuma said that in his discussions with business people, some had argued for the weaker currency and others for a stronger.

"Economists don't easily agree on matters...but it is a matter that is occupying the minds of economists as well as the government."

He said discussions on the currency would form "part of some very special session", where many economic issues would be discussed.

Earlier this week, in its first assessment of the economy, the Organisation for Economic Co-operation and Development (OECD) recommended the lifting of South Africa's remaining foreign exchange controls and that authorities should intervene more actively against strength in the rand.

The OECD said the strong rand has hit exports and recommended that the government provide policy signals on the exchange rate and the direction of interest rates.

It said gains in the rand were hurting the ability to boost exports, while the volatility of the currency was provoking higher inflation.

Exchange rate volatility was a significant driver of inflation with rand depreciation having a bigger effect on prices than rand appreciation.

The OECD did not say what an appropriate level for the rand would be, but said any steps to limit volatility should be done within the policy of keeping inflation inside a 3% to 6% target range.

Finance Minister Pravin Gordhan has remained firm on using existing policy to let markets determine the value of the rand.

 - Sapa