Gordhan: Rand is too strong

By Staff Writer
Finance Minister Pravin Gordhan thinks the Rand is too strong and said that South Africa shares its concern with other emerging markets.

"The rand is too strong given the South African context, and we share the concerns of other emerging markets," he told reporters ahead of meetings of global finance chiefs at the International Monetary Fund and World Bank this weekend.

South Africa exited the recession during the third quarter of 2009 already but the country is still struggling with high unemployment and the economic recovery has been sluggish.

The Rand has, however, gained more than 28% against the US Dollar since the beginning of 2009 and more than seven percent since the start of 2010.
Low interest rates in advanced economies have caused investors to search for better returns in fast-growing emerging economies and the flow of capital is pushing up asset prices and inflation.

When Gordhan was asked whether the Reserve Bank should be accumulating foreign currency reserves more aggressively in the face of the strong Rand, Gordhan said: "More means you have got to find more resources; nothing comes for free in this business. We're working on that with the Reserve Bank."
Although the Rand weakened on Thursday, it's expected that the currency will be resuming its upward path on strong capital inflows.

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