The Freedom Front Plus joined other political parties on Friday in welcoming the South African Reserve Bank’s reduction of the repo rate by half a percentage point to 7,5%, but expressed concern about the strong rand.
“It is not only good news for young home owners, but will also contribute to a more realistic value for the rand on international markets,” FF+ trade and industry spokesperson Willie Spies said in a statement.
The FF+ has been campaigning for a decrease in interest rates for some time, as the higher interest rates have been “artificially pushing the value of the rand higher”.
“The strong rand has recently increased the fear of drastic job losses in, especially, the mining industry and has even caused labour unrest at certain mines,” he said.
A recent study on South African and United States inflation trends indicated a realistic value for the rand to be between R8,75 and R8,88 to the US dollar.
“The South African economy does not need either a weak or a strong monetary unit, but a stable, realistic monetary unit.
“Hopefully the timeous decrease in the repo rate will contribute to a stable monetary unit,” Spies said.
In another statement, FF+ agriculture spokesperson Werner Weber expressed concern over the destructive results the “unnaturally high value of the rand” has on the agricultural sector.
“The export-oriented industries within agriculture, especially, have reached a point where drastic decisions will have to be taken whether it is still possible to continue with production and/or exports,” he said.
Although it may appear no visible damage has been caused, the “great instability within agriculture” could be the result of an unnaturally strong rand.
Large-scale unemployment could result if the monetary authorities do not institute drastic measures to normalise the situation.
The decrease of the repo rate is an essential step in the right direction.
“The FF+, however, insists the monetary authorities take more corrective measures over and above the decrease in the repo rate and recommends that foreign-exchange controls be relaxed,” Weber said. — Sapa
‘Mboweni has shown foresight’