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Gordhan: Rand will bounce back after strike damage

Kaori Kaneko

Finance Minister Pravin Gordhan says labour strikes in the mining sector may have hurt the rand but the currency will bounce back.

Finance Minister Pravin Gordhan says labour strikes in the mining sector have hurt the rand but adds the currency will bounce back. (David Harrison, M&G)

Widespread labour unrest has already shut down large parts of the mining industry in the world's top platinum producer and a major supplier of gold, pushing prices of precious metals higher.

"The initial stage of the [rand] depreciation, clearly gloomy news coming from Europe has impacted in our situation," Gordhan told Reuters in an interview ahead of meetings of the International Monetary Fund and World Bank in Tokyo.

"And I'm sure the last 10 days or so, sentiment must have been impacted by the strikes in our country as well. But I'm sure we'll bounce back and get to some level of new normality."

The rand has fallen against the dollar, hitting a three and a half-year low earlier this week as the strikes fanned volatility.

Gordhan said the government had taken steps to address the labour unrest, stressing that South Africa was still a "a prime nation" for investment.

"I want to assure everyone concerned that the government as a whole is putting immense efforts to bring together the employer community, trade union movement and the government itself in order to stabilise the situation rapidly as possible," he said.

Gordhan acknowledged that the strikes would have an impact on the economy in the short-term but said the nation has programmes to ease such adverse impact.

"We have many programmes on the other hand, which are in place and as they begin to operate will mitigate some of the damage that might be done during this period of strikes and dropping exports," he said.

Separately, South African Reserve Bank Governor Gill Marcus said the country's economic outlook was deteriorating rapidly.

The International Monetary Fund (IMF) said on Tuesday spillovers from the eurozone crisis into Africa have so far been modest except for in South Africa, which has close financial and trading ties with Europe.

The IMF cut its 2013 forecast for South African growth to 3% from a July projection of 3.3% mainly due to the impact from the continuing eurozone debt crisis. It maintained its 2012 projection of 2.6%.

Gordhan said the government would seek to balance the need for enhancing growth and medium-term fiscal consolidation. He will present his medium term budget to Parliament on October 25.

He also stressed South Africa wanted to see greater representation for Africa inside the IMF as part of the institution's long-running reform effort.

"South Africa wants to see the third chair in the IMF board, either within the current arrangement of 24 chairs or by the additional extra chair," he said, referring to the IMF's board of directors. – Reuters

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