South African watchdog comments on central bank rattle rand

Audrey Hill
June 20, 2017

At 4.08pm the benchmark R186 bond was bid at 8.55%, from 8.47% on Thursday, as the rand weakened as much as 2% to the dollar after Public Protector Busisiwe Mkhwebane recommended changes to the mandate of the Reserve Bank.

But SARB Governor Lesetja Kganyago told a business gathering late on Monday, without making specific reference to Mkhwebane's recommendations, that keeping inflation low and protecting the value of the currency was supportive of economic growth.

The public protector will also be opposing applications brought by ministers Mosebenzi Zwane and Des van Rooyen in the same matter. That phrase has been central to South African monetary policy since the end of white-minority rule in 1994. Nomura emerging markets economist Peter Attard Montalto said the tangent was touching "Pandora's Box".

Nevertheless, he said any changes to the central bank's mandate were unlikely to happen in the short to medium run given the legal pushback that was likely to come from the SARB itself.

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The NGO's Director Paul Hoffman says the bailout was illegal and there was evidence of maladministration by the new South African government in its failure to follow up on misappropriated money.

Mkhwebane made the comments at a briefing in which she also ordered a re-opening of investigations into apartheid-era transactions between the state and Absa Bank. Zuma said he wasn't given enough opportunity to respond to the report prior to its publication, and that only he had the right to appoint judicial commissions.

Zuma filed the application to review and set aside the report in the High Court in Pretoria a year ago.

"Absa did not make a provision in its accounts for the repayment of the interest on the SARB loan to Bankorp because no such liability to repay interest existed", they said.

Other reports by MaliBehiribAe

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