In his Budget speech in Parliament on Wednesday, Minister of Finance Manuel said that the exchange rate of the rand is not under control of the government.
“There are many factors that impact on the rand. The United States elections in November will create all manner of uncertainty, so I would rather not speculate on the exchange rate. I will leave that up to the professional market players,” Manuel said at a media briefing before Wednesday’s Budget.
Treasury officials said in informal briefings that now that the net open forward position (NOFP), which is the South African Reserve Bank’s forward book minus net foreign reserves, has been eliminated in 2003, future foreign loans will be aimed at merely redeeming maturing foreign loans, as well as paying for the arms procurement.
The NOFP was reduced from $23,3-billion in September 1998 to $4,8-billion at the end of 2001 and eliminated in 2003.
The rand rapidly lost its value in the fourth quarter of 2001 in response to risk aversion after September 11, and as commodity prices fell.
It went from R8,50 a dollar on September 11 2001 to a record worst level of R13,86 on December 20 2001, but has since recovered to the R6,50 a dollar level.
The recovery in the rand meant that the South African Reserve Bank made a profit of R11,1-billion on its forward book during the course of 2003. The forward book is estimated to have been eliminated in January this year. — I-Net Bridge