Rand firms to 2-1/2 year high against the dollar as Reserve Bank says there is "no easy answer" to deal with the strength of the currency.
The rand firmed to a 2-1/2 year high against the dollar in early Wednesday trade as the Reserve Bank says there is "no easy answer" to deal with the strength of the currency.
The currency touched 7.0475 earlier on Wednesday, after closing below the key 7.10 level on Tuesday.
Vestact’s Sasha Naryshkine said the rand’s strength is mainly due to a weak dollar. It’s at a 15 year low against the yen,” he said.
“One is deeing it in the gold price, it’s the anti-dollar measure,” Naryshkine said.
He added that the current rand/dollar level is surprising. “Ask people 6 years ago and they would not have imagined it to reach this level,” he said.
Reserve Bank Governor Gill Marcus said on Wednesday there was "no easy answer" to deal with the strong rand currency which has gained around 25 percent against the dollar since the start of 2009.
"The rand's impact on manufacturing ... and exports is something that receives a lot of attention all the time. But it's another thing to identify a workable solution," Marcus said.
She added dealing with the currency strength was not simple and even some developing countries were grappling with finding solutions to weaken their currencies.
Marcus also said South African banks will need to work on their liquidity to meet new proposed regulations under the planned Basel III series of banking reforms, requiring lenders to hold more capital and liquidity to avoid another financial crisis that then brings about massive taxpayer bailouts.
"Capital raising for our banks is not an issue. The real question for us will be liquidity," she said.
