SA won’t ‘freeze’ rand, says Patel

JOHANNESBURG – South Africa will debate the strength of its rand currency but this does not necessarily mean policies will change, Economic Development Minister Ebrahim Patel said this week.

Patel reiterated that trade unions, the private sector and the government will look at the level of the currency, whose strength he said is harming the economy.But he again denied a media report from last month that he had proposed to ‘freeze’ the rand.The rand is one of the best performing emerging market currencies, having gained more than 20 per cent against the dollar and firmed sharply against other currencies this year.The central bank and finance ministry have warned its gains could harm some parts of Africa’s biggest economy which is languishing in its first recession since 1992, but have stressed it would keep its floating exchange rate policy.’We want to just open up the discussion, it doesn’t mean that we will necessarily change on every aspect, but we want to hear the views of South Africans much more clearly in the articulation of policy,’ Patel said.Last week, Patel said his ministry has agreed to hold discussions with trade unions and companies on the impact of a strong rand on the economy.The government under President Jacob Zuma is under pressure from its trade union and communist allies to take measures that could weaken the currency.’There is a huge price to be paid for an exchange rate that prices South Africa out of international markets,’ said Patel, a former trade unionist and one of the labour federation Cosatu’s nominees in Zuma’s cabinet.’We need a competitive exchange rate,’ he said.The rand’s gains are a particular worry for the manufacturing sector, which shed 150 000 jobs in the third quarter, more than any other industries. Rand strength makes South African exports more expensive and also makes it harder for local manufacturers to compete against cheaper imports.Cosatu is pushing for Patel to have a greater say in economic planning to try and shift policy to the left, while lessening the powers of Trevor Manuel, a former finance minister who is well regarded by investors and who heads the new National Planning Commission.But the African National Congress leadership on Monday fully endorsed Manuel to head the commission charged with setting out South Africa’s long-term economic trajectory. – Nampa-Reuters