Despite a dwindling economy and a weakened rand, Finance Minister Pravin Gordhan has assured those concerned about the rand’s performance that the currency, which reached a four-year low last Thursday, will recover.
Gordhan expressed his confidence in an interview conducted while he was in Morocco attending an annual African Development Bank meeting. “We are very confident that the rand will recover in time, that the markets have overreached themselves,” he stated
Never too far away to give marketing advice, “Exporters in South Africa should use the opportunity provided by the weaker rand to increase exports,” he said.
Last week saw the rand plummet from R9.61 to R10.20 against the US dollar on Friday. This drop suggested that many investors have considered the potential disruption of mineral production which would in turn affect exports and further harm the rand.
Labour unrest and a 60% wage increase demanded by the National Union of Mineworkers (NUM) for certain workers has raised concerns and repelled investors.
The four-year low of R10 against the dollar was reached shortly after President Jacob Zuma made a statement about the mining sector’s labour instability last Thursday during his economy briefing.
However, one must not come to conclude that the president’s words are responsible for the decrease, insisted Gordhan. “The weakness of the rand has nothing to do with the statements made by President Zuma who was reassuring the public that, as government, we understand the importance of the mining sector,” said the finance minister.
Gordhan, along with Deputy President Kgalema Motlante has, according to the Sunday Times, agreed to sit down with Labour Minister Mildred Oliphant and Minister of mineral resources Susan Shabangu to discuss approaches on ending the strikes in the mining sector before it descends into chaos.
The government has seen the situation as one that requires state intervention. Those who engaged with Gordhan and his associates have expressed great satisfaction with the finance minister, reporting that he displayed “a sense of mission and a sense of urgency.”
“We still have three quarters in the year to intensify our efforts to boost growth,” insisted the finance minister who was referring to the poor growth of the economy seen last quarter.
Chamber of Mines CEO, Bheki Sibiya, who is collaborating with the government, announced that the chamber would engage in talks with the NUM and is hoping to do the same with its rival with Association of Mineworkers and Construction Union.
Consumers should also be aware that while the mining sector’s labour unrest is largely to blame for the currency’s decline, there are many other factors that added to the recent strength of the US dollar.