SARB denies defending rand
The South African Reserve Bank (SARB) has dismissed a notion that it is influencing the rand's strength and insists that the currency is allowed to float freely.
The South African Reserve Bank (SARB) denies intervening in the foreign exchange market to defend the rand, amid speculation of a cabinet reshuffle and after the midnight removal of Pravin Gordhan as finance minister.
“The SARB policy approach is not to intervene in the foreign-exchange market with the objective of influencing the exchange rate of the rand towards a particular range or level,” Daniel Mminele, deputy governor of the SARB, told Moneyweb.
JustOneLap founder Simon Brown said it was unlikely that the central bank would intervene.
“The forex market is bigger than the SARB and if traders see them defending a position they will trade against them. The traders are bigger and will win,” he said.
The so-called gradual depreciation of the rand may also be due to the markets having already factored in Gordhan's removal and the probability of a credit-rating downgrade.
Mminele said the SARB adhered to a policy of a floating exchange rate and dealt with adverse exchange rate movements, in so far as they might affect the inflation outlook, through appropriate monetary policy.
MONEYWEB
“The SARB policy approach is not to intervene in the foreign-exchange market with the objective of influencing the exchange rate of the rand towards a particular range or level,” Daniel Mminele, deputy governor of the SARB, told Moneyweb.
JustOneLap founder Simon Brown said it was unlikely that the central bank would intervene.
“The forex market is bigger than the SARB and if traders see them defending a position they will trade against them. The traders are bigger and will win,” he said.
The so-called gradual depreciation of the rand may also be due to the markets having already factored in Gordhan's removal and the probability of a credit-rating downgrade.
Mminele said the SARB adhered to a policy of a floating exchange rate and dealt with adverse exchange rate movements, in so far as they might affect the inflation outlook, through appropriate monetary policy.
MONEYWEB
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