Gordhan concerned that rand too strong

South Africa’s Finance Minister, Pravin Gordhan, said on Tuesday that he is concerned about the strong and uncompetitive levels of the rand at the moment and wished authorities had the capacity to intervene in a more assertive way than is available at present.

He said, though, that Treasury would assist to increase foreign exchange and gold reserves beyond the $40-billion mark.

One of the big surprises in Tuesday’s medium-term budget is an announcement by Treasury that exchange controls will be relaxed to lower the cost of doing business and to promote investment. Included among these reforms is the removal of the 180-day rule requiring companies to convert their foreign exchange into rand. This rule has added to the volatility of the rand in the past.

At the same time, the Treasury has called current strong levels of the rand into question and said it will work together with the central bank to support low inflation and a more stable and competitive real exchange rate. — I-Net Bridge

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Evan Pickworth
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