Mail & Guardian

No U-turn on currency by Manufacturing Circle

22 Feb 2013 00:00 | Letters

'We have consistently argued in favour of a competitive and stable rand.' (AFP)

'We have consistently argued in favour of a competitive and stable rand.' (AFP)

But the Manufacturing Circle's monetary policy has not changed. It still firmly supports a competitive and stable rand as a driver of ­manufacturing growth.

A survey of the coverage of the press conference at which we released our 2012 fourth-quarter survey results, plus conversations with numerous speakers, suggests that a reply to a question from Business Day, that the weaker rand is providing a "breather" to manufacturers in the face of a host of other domestic challenges, might have triggered the misunderstanding.

The article also mistakenly assumes:

We have consistently argued in favour of a competitive and stable rand. We believe this should be pursued through a review of monetary policy, which should consider a host of policy tools as well as inflation targeting. They could include the adoption of a periodically reviewed ­currency band, the use of capital controls and macro-prudential ­regulation. Consensus among our members suggests that, in current conditions, such a band should be between R8.50/$1 and R9.50/$1.

What we have never done is to argue that a more competitive and stable currency is a panacea for manufacturing or export growth.

For that, we have far too many domestic policy challenges.

The erroneous conclusions outlined above have unfortunate consequences, deepening the ignorance of those who disregard ­manufacturing as a high-multiplier sector that can provide many quality jobs. –  Coenraad Bezuidenhout, executive director, Manufacturing Circle

View the original online publication here