‘Reserve Bank will continue to protect currency’

The South African Reserve Bank (SARB) stands ready to protect the rand’s value, said deputy governor Daniel Mminele.

“The bank, in following a forward-looking approach to monetary management, does not allow any doubting of its preparedness to act when necessary and in keeping with the commitment to its primary objective,”  he said on Wednesday,  speaking at the South Africa Tomorrow Investor Conference in New York.

In announcing the appointment of South Africa’s next Reserve Bank Governor on Monday, President Jacob Zuma said that in terms of the Constitution, the primary objective of the central bank was to protect the value of the currency in the interests of a balanced and sustainable economic growth.

At the announcement of his appointment as the Governor-designate, Lesetja Kganyago said the bank’s objective was to contain inflation and stabilise prices. Last month South Africa’s currency fell more than 5% against the US Dollar.
Kganyago, the former Deputy Governor, reiterated that while the Reserve Bank did not target a particular level or range of the exchange rate, “we are nonetheless mindful of the potential negative consequences of accelerated rand depreciation on the outlook for inflation”.

South Africa’s inflation is already above the 3% to 6% inflation rate target band. In September, CPI rose to 6.4%.
“Based on the bank’s projections for growth and inflation over the coming years and the uncertainties that surround these projections, it would be reasonable to infer that a gradual, data dependent, normalisation path remains appropriate,” said Mminele.