ECONOMY
Stable currency on the cards
Posted Tue, 22 Nov 2005
South Africa can expect to have a stable currency in the future,
SA Reserve Bank (SARB) governor Tito Mboweni said on Monday.
He told business leaders in Johannesburg that the rand's
volatility had declined from 30 percent in mid-2003 to 10 percent
in October 2005.
"Scientifically speaking the rand is far more stable," he said.
"Volatility has declined over recent months."
Mboweni said the relationship between exchange movements and
growth remained inconclusive.
"If the macro-economic fundamentals were properly in place and
followed on by detailed micro-economic reform, the economy would
manage to grow at a much higher rate than at the moment."
He said businesses, especially those in mining, had to get used
to having an exchange rate of around R6 to the US dollar.
"The mining companies must learn to live with reality. If the
macro-economic fundamentals are good, you'll have a good exchange
rate."
Mboweni refused to answer
questions about the removal of
exchange controls, saying the last time he did that he got into
trouble with Finance Minister Trevor Manuel.
"When I made those remarks, the Minister sent me a message
saying this was his policy area. We kind of laughed about it."
He said the SARB was not suffering any fiscal dominance on its
monetary policy.
Asked by a business delegate whether he thought real interest
rates were too high, Mboweni replied: "I do not think real interest
rates are prohibitive. Most corporations seem to be sitting in a
comfortable position if you look at their balance sheets."
The SARB expected CPIX (consumer inflation less mortgage rates)
to increase to about 5.5 percent by the middle of next year.
Evidence forecast is that inflation will remain in the target
range (between three and six percent) but will move slightly higher
to 5.5 percent during the first half of next year.
Mboweni said a key spoiler for inflation was oil
prices.
Sapa
| 
INDICATORS
