SA unfazed by rand rejection

JOHANNESBURG - South African minister in the President’s Office for Planning, Monitoring and Evaluation, Jeff Radebe, says his country is unfazed by the rejection of its currency on the Zimbabwean market.

Radebe, who is also chairman of the South African National Planning Commission, told journalists on the sidelines of the ongoing African Media Forum here that the rejection of the embattled South African rand changed nothing in the two countries’ trade dynamics.

“The reports have come to us and we are very much aware of this, but as you may know the world economy has taken a knock and when the global market sneezes countries like Zimbabwe and South Africa catch a cold.

“Our relations remain strong despite the performance of the rand, economic relations are deep and we continue to build on these relations,” he said.

The South African minister also said the rand’s nosedive was expected to lead to better economic relations as Zimbabwe uses the United States dollar as its main currency.

“Zimbabwe buys using the US dollar so it is not doom and gloom for everyone in the region, and the last time this happened we then experienced economic growth through exports.

“As far as we are concerned, relations between South Africa and Zimbabwe remain very high, decisions that Zimbabwe takes as a sovereign state, our government cannot control, so we cannot control the rejection of the rand in your country,” he said.

However, economists have warned that Zimbabwe’s current account deficit will rise significantly owing to the weakening of the rand.

South Africa is Zimbabwe’s biggest trading partner.

In 2009, Zimbabwe ditched the Zimbabwean dollar, and government adopted the multi-currency system — a basket of currencies dominated by the United States dollar and South African rand.

During the ensuing years, Zimbabweans preferred the rand to any other currency, however after the rand took the dive, in light of the introduction of bond coins by the Reserve Bank of Zimbabwe earlier this year, consumers started rejecting the rand.

Analysts say it is ironic that consumers have since shunned the plummeting rand — in favour of the bond coins which were initially met with scepticism in the market.

Central bank governor John Mangudya recently said the rand rejection was normal.

“What has been happening with the rand coins is only natural because the value of the rand has been falling, therefore businesses do not want to incur exchange rate loses.

At the same time no one also wants to incur exchange rate losses so it’s no one’s fault really,” he said.

The rand’s misfortune comes as the prospects of a US rate hike hardened, a development that helped push stocks higher as money flowed into rand hedges such as the gold sector.

The rand remained on the back foot yesterday following solid US employment data, just before noon yesterday the rand had extended losses by 0,23 percent to R11,850/$, just off the fresh all-time low of 14,2080 in the New York session.

Comments (1)

This reaction by the informal market players, vemakombi nevemisika is symptomatic of our economy which is on autopilot. Our shops are full of goods +-80% imported from South Africa and daily we fill buses from Roadport and all other major cities with people going to South Africa in search of a better livelihood, yet we shun their currency! The truth is that our people more and more are becoming excluded from the banking system instead of things moving in the opposite direction. That is the sad irony of our once great country Zim. If our people were afforded increased access to normal and formal banking they would all understand it when one currency falls against the other! After all we have experienced it a lot before with our own Z$. Yet we never rejected it because it was our own even when the rate became Z$millions per US$1. So the sooner we all realise that both rand and US$ are not our own currencies, the sooner we educate our combi crews and anamai vemusika on what the rate between the two currencies is at on a day to day basis, the easier is will be for all of us. The worst culprits are the police manning those roadblocks who refuse to accept rand. Vasingazive ngavadzidziswe please Governor John! Or have them arrested for refusing to take a lawful currency! These are the guys fanning corruption by punishing the innocent transacting public by refusing a currency from a country where most of our brothers and sisters are irking out a living. Zimbabweans let us wake up and realise we are only making lives more difficult for our own people. Governor, please make is a point that all banking outlets have a desk that accepts coins from the public to exchange at ZERO cost as a public service to alleviate our suffering please.

Mhiri wekwaLimpopo - 16 November 2015

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