Briefing Parliament’s Trade and Industry committee in Cape Town yesterday, Treasury’s deputy director general of economic policy, Chris Loewald, and deputy chief economist of the SARB, Johan van den Heever, stated that the level of the exchange rate was just one of a number of factors affecting economic growth and job creation. Van den Heever noted that while SA’s manufacturing sector’s contribution to overall GDP had diminished over the years, this could not be solely blamed on the exchange rate, stating that the integration of SA into the global economy and the removal of import barriers had also helped contribute to this decline.
Furthermore, van den Heever stated that “Real GDP growth in manufacturing seems more sensitive to local and international income and expenditure than the exchange rate”, while also continuing to reiterate both the Bank’s and Treasury’s stance on FX policy that there is no “ideal” level for the rand and that it would be “dangerous” to target a specific level. We maintain our view that given the comments made by Treasury and SARB officials, there is unlikely to be any significant changes to FX policy in the medium term.
Source:
ABSA Bank
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