Weaker Rand Should Help South Africa Compete, Gordhan Says
The rand, which has slumped 19 percent against the dollar this year, should increase South Africa’s export competitiveness, Finance Minister Pravin Gordhan said.
“Some say they are in a better position to export now than they used to be and they have got better order books than before,” Gordhan said in an interview at a mining conference in Johannesburg. “Some are taking advantage of the weaker rand, from what I hear.”
The weaker currency, the worst performer this year among 16 major currencies tracked by Bloomberg, has increased price pressures in Africa’s largest economy, where inflation broke through the Reserve Bank’s 3 percent to 6 percent target band in July for the first time in 15 months. It traded at 10.3959 as of 6:50 p.m. today.
Fuel prices keep going up if the rand depreciates, Gordhan said. “So how you keep the balance is part of the difficult task that we have,” he said.
The Reserve Bank has had to find a balance between increasing inflation and sluggish growth and has kept the benchmark repurchase rate at 5 percent for more than a year. Violent strikes in the mining industry limited growth in Africa’s largest economy to 2.5 percent last year.
While gross domestic product expanded an annualized 3 percent in the second quarter, according to data published earlier today by the statistics office, the Reserve Bank expects the economy to grow by 2 percent in 2013 in the face of weak business and consumer confidence and sluggish global demand.
“Strikes are not the end of the world,” Gordhan said today. “Every part of the world has strikes. I do not think we should overplay it.”
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