Publications
Partners
Johannesburg - The rand is overvalued and the government is
currently discussing what to do about it, Trade and Industry Minister Rob
Davies said on Monday.
Davies made the comment at a media briefing in Johannesburg.
The rand has gained about 14% against the dollar in the last 12 months, drawing
concern from both manufacturers and unions.
A stronger rand is a negative for exporters, as it eats into profits when revenues from abroad are brought home.
“Do we have a desirable currency? We don’t,” Davies said.
“The rand is overvalued. What can we do about it? That is a difficult question ... The discussion about what are going to do about it is ongoing.”
The rand has helped to contain inflation, which has been
inside the central bank’s 3% to 6% target band since February 2010.
Finance Minister Pravin Gordhan said last month South Africa
was fortunate to have a stronger rand and the government would not intervene to
weaken the currency.
South Africa last year spent over R15bn helping the Reserve Bank to accumulate reserves to limit rand gains.
The bank has said it does not target a level for the
exchange rate but will continue to build reserves “as and when” appropriate.
South Africa last year rejected the idea of taxing capital inflows such as those implemented by Brazil and other emerging markets.
Manufacturers would rather see the rand at about R8.50/$.
