BRONWEN ROBERTS, Pretoria | Thursday 4.30pm
THE Reserve Bank will no longer protect the rand against depreciation but concentrate instead on meeting the government’s inflation targets, governor Tito Mboweni said on Thursday.
“We are not entering the market to defend a particular level of the rand/dollar exchange rate,” Mboweni told parliament’s finance committee.
“The exchange rate must find its level must operate within that level. Anybody who wants to take any foreign exchange risk must do so themselves. “We are providing no cushion. It’s too expensive to do that.”
The rand was being traded at R6,35 to the dollar at mid-day on Thursday.
In 1998, the Reserve Bank had spent more than $10-billion on protecting the rand against depreciation during the global economic crisis, Mboweni said. Mboweni said that the bank will now focus on meeting inflation targets of three and six percent by 2002 announced by government last week. These targets are attainable, he added.
It would consider intervening in the currency market only if the rand were to depreciate massively, threatening the inflation rate, said Mboweni, who took over governship of the bank seven months ago.– AFP