The strong rand was firmly in the sights of the African National Congress (ANC)-led tripartite alliance, party secretary-general Gwede Mantashe said on Sunday.

The value of the currency was one of a number of issues to be tackled under a wider mandate the alliance team on macroeconomic policy wanted to give to the Reserve Bank, Mantashe said.

"The strength of the rand is an issue that is important to the economy because it impacts overall on the current account of the balance of payments. Therefore it is one issue that we should look into because if, during this crisis, our rand is at a level that encourages imports rather than exports, it is deepening our economic crisis for sure."

This year the rand has risen more than 28 percent against the dollar and 17 percent against a trade-weighted basket of currencies. The Congress of South African Trade Unions, the ANC's labour federation ally, has called for an immediate reduction in interest rates to three percent and the jettisoning of inflation targeting to make the currency more competitive.

"Be careful what you wish for"

Many doubt whether SA has the foreign exchange reserves required to intervene in the market to weaken the currency. Some say it is not even within the scope of domestic policy to influence.

Nedbank senior trader Dave Gracey last week said the rand's rally was driven by global factors. Domestic fundamentals were "not encouraging" and when these took hold at some point, the rand would weaken, he said. "Sentiment is a funny thing — you must be careful what you wish for," Gracey said.

Still, many in the government say the currency's value is the cause of the severe job losses this year. SA's economy has shed nearly a million jobs, official figures last month showed. In the third quarter, manufacturing, the second-largest sector, lost 150 000 jobs.

Speaking in Parliament on Friday, Trade and Industry Minister Rob Davies argued further for a weaker currency.

A killer for the economy

"We have to come out of the summit and talk the rand down. We have to come out with a clear message that the firm rand is a killer for the economy," Davies said. "Unless we have a competitive exchange rate everything else we do in industrial policy will be undermined. We cannot have a situation where we just ignore that factor and just talk about other things."

Without a lower currency, other efforts to boost South African industry would not work, he said.

"The appreciation in recent few months has made our industrial recovery and industrial exports more difficult. Successful industrialising countries have a much more competitive exchange rate than we have. In many respects, addressing this issue is as critical as anything else we can do in industrial policy."

Davies declined to give a value for what he thought a competitive value would be for the rand, which last month traded as high as R7.23 to the US dollar.

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