DEBATE ON IMPACT OF STRONG RAND MOOTED
ECONOMIC Development Minister Ebrahim Patel plans to drive a no-holds-barred national debate on the economic effect of the strong rand and options to influence its price.
"We cannot suppress the message that is coming from the private sector, that there is a huge price to be paid for an exchange rate that prices South Africa out of international markets," he said.
The rand has strengthened more than 25percent against the weakening dollar this year, hampering exports and encouraging imports, which fuel the current account deficit that many regard as the Achille's heel of the South African economy.
"Unavoidably, going forward, we are going to have to have this conversation, but we will have it openly, we will have it publicly," Patel said.
He said the discussion would begin within two weeks, with the government inviting business and labour to explain their views on the foreign value of the rand.
Patel said he had never advocated or even discussed pegging the value of the rand, but said he would not try to exclude that option from the debate he plans to drive.
A national business daily reported three weeks ago that he planned to propose setting the value of the rand. The report sent the unit plunging until the government repudiated the idea.
Patel said yesterday the report was "pure invention".
He did mention China's decision to fix the rate of its currency against a basket of other currencies among the options that countries had used to manage the negative effects of a strong currency, but he said it was an example, not a recommendation. He also mentioned some Asian countries, Chile and Brazil as examples of foreign exchange intervention.
"It's not as if there is some plan that we have and we just want to dust off and present. So we say to people, tell us what you think should be done," he said.