SOUTH Africa’s central bank governor Tito Mboweni said that the rand was grossly undervalued due to negative sentiment which was not based on the country’s economic fundamentals. In an interview with an Afrikaans-language television station, Mboweni also repeated that the central bank was determined to hit its 3% to 6% target for the inflation measure known as CPIX by the end of 2002. ”I think that all of us would agree that the exchange rate of the rand is not where it should be. I am quite convinced as well that the exchange rate of the rand is grossly undervalued,” but he did not say by how much he thought it was undervalued. The rand is now trading at 6.9400 to the dollar, compared with 6.04 at the start of the year and a record low of 7.2050 to the U.S. unit on May 25. This is a depreciation of 16%. Mboweni has said earlier that around a quarter of that decline was due to the impact of Zimbabwe’s political crisis. ”I think that one of the problems that we face is that the market has not really focused just on the fundamentals of the economy. They have focused on non-economic sentiment-making events as a basis for taking positions…”, he said. The central bank’s benchmark measure of CPIX rose by 8% in the year to July, but Mboweni pointed out that this was not too worrying as the bank still had more than two years to get it within its target range. – Reuters