EDITOR’S VIEW
RON DERBY: Gambling with a weak rand could cost us even more in the long run
Would a weak rand really prove the solution to our unemployment situation in the long term?
It's a debate that has raged eternally in South Africa. What is better, an appreciating currency or a weak rand? Unions have long been uncomfortable with the central bank's mandate to keep inflation within a target band of 3%-6%, which they claim has kept interest rates high and in turn kept the rand relatively strong, discouraging investment. On the other side of the debate, there is caution about the impact of unwittingly releasing an inflationary dragon. Investec strategist Michael Power, who spoke against inflation targeting in parliament before it was adopted as policy in 1999, said this week in the Financial Mail this fear really belonged to the middle to upper classes as they stood to lose the most in the short to medium term from a rapidly depreciating currency. When measured in US dollars, Powers says, South Africans who are employed enjoy much higher standards of living than similarly qualified workers in other emerging market nations. Were South Africa to follow an indust...
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