South African Trade and Industry Minister Rob Davies said the strength of the rand is undermining the nation’s competitiveness and that the government needs to decide whether to act on the issue.
“There is a consensus that at this level where the rand is now, the rand is uncompetitive and is having a detrimental effect, not only on exporters but also on local producers who are suffering unfair competition from imports,” Davies told reporters in Cape Town today. “There is a huge debate in South Africa about whether we should try some new things or not. We have to work on this particular issue.”
The rand has gained 39 percent against the dollar since the beginning of 2009, as near-zero interest rates in developed nations encouraged investors to borrow cheaply and invest in higher-yielding markets including South Africa, where the benchmark rate is 5.5 percent.
The rand traded at 6.8291 at 1:46 p.m. in Johannesburg, up from 6.8643 late yesterday.
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