Publications
Partners
Washington - The rand is too strong given the country's economic fundamentals, Finance Minister Pravin Gordhan said on Thursday.
"The rand is too strong given the South African context, and we share the concerns of other emerging markets," he told reporters ahead of meetings of global finance chiefs at the International Monetary Fund and World Bank this weekend.
Although South Africa exited a recession in the third quarter of 2009, it has continued to struggle with high unemployment and the economic recovery is expected to be sluggish.
The rand has gained more than 28% against the US dollar since the start of 2009 and more than 7% since the beginning of the year.
Low interest rates in advanced economies have sent investors searching for better returns in fast-growing emerging economies, and the flow of capital is pushing up asset prices and inflation.
Asked whether the Reserve Bank should be accumulating foreign currency reserves more aggressively in the face of the strong rand, Gordhan said: "More means you have got to find more resources; nothing comes for free in this business. We're working on that with the Reserve Bank."
The South African currency weakened on Thursday but is expected to resume its upward path on strong capital inflows.
On September 21 the IMF said the rand could be 5% to 15% overvalued.
