No delinking from rand

27 December 2018 | Economics

The pegging of the Namibian dollar to the South African rand is still in the best interest of Namibia and there are no plans in the near future to delink the local currency.

This was confirmed by both finance minister Calle Schlettwein and the Bank of Namibia (BoN) in statements made over the Christmas weekend.

Schlettwein and Ebson Uanguta, the deputy president of the central bank, were reacting to an article published on Friday by Bloomberg which stated that Namibia is considering delinking the Namibian dollar from the rand after 25 years, due to the fickleness of the currency and the economic challenges it faces.

According to Bloomberg's article, following an interview with Schlettwein in New York, the government is considering its options to amend the currency peg agreement or plot a new way forward for the Namibian dollar.

However, such a change will not take place in the near future because Namibia is also grappling with its first recession in 14 years, Bloomberg reported.

Integration with South Africa, including customs agreements, are to be reassessed, Bloomberg said.

It quotes Schlettwein as saying that the entire basket must be reassessed, in the interest of economic recovery.

Schlettwein told Namibian Sun the journalist had probed him regarding Namibia's financial needs over the next decade.









“We are constantly weighing up the benefits and costs of the common monetary area agreement, including the 1:1 pegging of the two currencies. Delinking is not imminent,” Schlettwein said.





In a statement released on Monday, Uanguta said it is no secret that the BoN, from time to time, evaluates the sustainability of the currency pegging agreement. This forms part of the central bank's policy advice it provides to government, “as it relates to any future options that may be considered, if and when the peg becomes unmaintainable”.

“These assessments have concluded that the benefits from the current fixed exchange rate outweigh the costs.”

He added that delinking could negatively affect Namibia.



Benefits

Namibia's average inflation rate is generally lower than that of sub-Saharan Africa due to the pegging agreement, which allows for lower inflation imports from South Africa. Delinking could compromise this benefit and lead to higher inflation.

Roughly 60% of all imported goods come from South Africa and 1:1 currency pegging agreement saves transaction costs. Imports are thus cheaper than they would be if the currencies were delinked.

Tourism, travel and trade between Namibia and South Africa is boosted in both directions due to the absence of an exchange rate risk, Uanguta added.

“The central bank is of the firm view that the peg remains in the best interest of Namibia. The bank and the finance ministry both believe that no other arrangement will deliver better,” he added.



JO-MARE DUDDY

Similar News

 

Construction sector recovery to take a while

15 hours ago | Economics

PHILLEPUS UUSIKUFor the past five years, the construction sector continued with a downward trend. The sector recorded negative growth rates of 41.1%, 23.1%,10.7%, 4.4% and...

South Africa to tackle climate challenges

15 hours ago | Economics

TIM COCKSSouth Africa will tell rich countries at climate talks this week to honour promises to help poorer nations go green and massively boost available...

Shipping greenhouse emissions to rise

15 hours ago | Economics

STINE JACOBSENThe global shipping industry is on course to see its greenhouse gas emissions rise by around a fifth by 2050 if action including introducing...

Eswatini king open to dialogue

15 hours ago | Economics

Southern African regional bloc SADC said on Saturday that Eswatini's King Mswati III, Africa's last absolute monarch, had accepted the need for a national dialogue...

IMF sees meagre growth for Namibia

1 day - 25 October 2021 | Economics

The International Monetary Fund forecasts that Africa's economic rebound from pandemic-induced shrinkage would be weaker than in the rest of the world in 2021 and...

BoN’s Covid relief measures amended

1 day - 25 October 2021 | Economics

Jo-Maré Duddy – The loan repayment moratorium provided in the Bank of Namibia’s pandemic relief policy has been revised from the current six to 24...

Nigeria launches eNaira

1 day - 25 October 2021 | Economics

Nigeria today launches a digital currency, the eNaira, months after it barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies. Central...

Rich should pay for greater carbon footprint

1 day - 25 October 2021 | Economics

Paris - As rich people have a greater carbon footprint than the poor they should pay more tax to compensate, says a study by the...

‘Global oil prices won't decline until 2023’

1 day - 25 October 2021 | Economics

Washington - The stunning recent run-up in global oil prices could threaten economic growth, and is unlikely to retreat until 2023, the World Bank has...

World's first and biggest cryptocurrency

1 day - 25 October 2021 | Economics

London - Bitcoin, which struck a record high above US$66 000 on Wednesday, has been on a roller-coaster ride since becoming the first cryptocurrency 13...

Latest News

Best deals to finance vehicles

15 hours ago | Business

PHILLEPUS UUSIKUNew vehicle sales in Namibia hit a record low due to consumers not being able to afford new vehicles and corporates not replacing their...

NUNW takes on Namcor over...

15 hours ago | Labour

OGONE TLHAGE WINDHOEKEmployees of the National Petroleum Corporation of Namibia (Namcor), through the National Union of Namibian Workers (NUNW), are challenging a...

‘Ghost’ defence attachés unmasked

15 hours ago | Ministries

STAFF REPORTER WINDHOEKThe defence ministry finds itself in hot water after it was found...

The youthful fierce, female farmer

15 hours ago | People

Jeanette Diergaardt Sixteen-year-old farmer Elandri Kruger shares her love and passion for farming. Farming with Kalahari Reds and Brahman cattle, she showed off her...

South Africa to tackle climate...

15 hours ago | Economics

TIM COCKSSouth Africa will tell rich countries at climate talks this week to honour promises to help poorer nations go green and massively boost available...

Shipping greenhouse emissions to rise...

15 hours ago | Economics

STINE JACOBSENThe global shipping industry is on course to see its greenhouse gas emissions rise by around a fifth by 2050 if action including introducing...

EDITORIAL: Tyranny of the majority

15 hours ago | Opinion

While the essence of democracy is majority rule, the making of binding decisions that affect the rights of the minority cannot pass the test of...

Vox pop question:

15 hours ago | Opinion

Dauglous MilupiI would make it compulsory for employees to dress in an appropriate manner because uniform unites the whole team and reduces the chances of...

Youth activist’s questionable acts

15 hours ago | Youth

Monique Adams and Jeanette Diergaardt The After Break magazine start-up run by Rejoice Amutenya and Mehafo Amunyela will be implementing more strict measures to...

Load More