The Rand has followed a volatile trend and while it is expected to remain volatile the Reserve Bank is unlikely to intervene in the market to try to stabilise the currency.

Governor Gill Marcus speaking at the European Economic and Financial Centre in London, says, “While the exchange rate has been an important shock absorber for the South African economy, some concern has been expressed regarding its volatility. We have not attempted to intervene directly in the foreign exchange market, as we do not believe that such intervention would be effective, given the size of South Africa’s foreign exchange market, and our relatively low level of foreign exchange reserves of around US$50 billion.”

The currency, which had touched five year lows, has made some ground after the central bank raised interest rates at its first meeting of the year in January.

The central bank said the surprise hike was the beginning of a moderate monetary tightening cycle.

Source – SAnews.gov.za