Reserve Bank Governor’s good news about the rand

The rand deserves more respect for its recent stability and if it “gets uncomfortably strong, we would be happy to accumulate more reserves”, said South African Reserve Bank Governor Lesetja Kganyago.

The currency, which has been derided domestically for years for its depreciation against the dollar, is “settling down to a more mature stage of life”, he told a forum hosted by the Kgalema Motlanthe Foundation on Friday evening.

“When people tell you the rand is a weak and volatile currency, encourage them to think again,” he said, noting that reserves have past $70 billion for the first time, making the country’s external position “arguably as strong as it has ever been”.

For the first time South Africa now meets “all the major reserve adequacy metrics, including the International Monetary Fund’s own measure”, he said, adding its commitment to a free-floating exchange rate is 27 years old and the policy “has worked well for us”.

South African assets are drawing renewed investor interest, buoyed by surging gold prices and cheaper oil, while the central bank’s July announcement that it will now target the bottom of its 3% to 6% inflation range has helped push bond yields lower.