{"id":52473,"date":"2014-01-30T12:55:53","date_gmt":"2014-01-30T10:55:53","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=52473"},"modified":"2014-01-30T16:52:02","modified_gmt":"2014-01-30T14:52:02","slug":"government-to-blame-for-weak-rand-da","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/52473\/government-to-blame-for-weak-rand-da\/","title":{"rendered":"Government to blame for weak rand: DA"},"content":{"rendered":"

The Democratic Alliance (DA<\/a>) has blamed economic mismanagement by the ANC<\/a> led government as one of the major factors leading to a rate hike and a steep drop in the local currency.<\/p>\n

In a statement issued on Thursday (30 January), DA shadow minister of finance, Tim Harris<\/a>, said that, while many factors have impacted the rand’s depreciation and the Wednesday (29 January) decision by the SA Reserve Bank<\/a> to hike interest rates, “much of the blame for the mismanagement of the economy can be laid at the door of President Zuma’s ANC”.<\/p>\n

The rand had hit a new high of R11.25 to the dollar this week, as investors continued an emerging market sell-off on the back of the US Federal Reserve reining in its stimulus policy.<\/p>\n

Shortly after the announcement of the rate hike, however, the rand weakened significantly against the US dollar, rising from a slightly recovered position of R11.02 on Wednesday morning, to a 5-year high of R11.38.<\/p>\n

By 12h30 on Thursday, the rand was trading at R11.36 to the dollar.<\/p>\n

\"Tim<\/a>

Tim Harris<\/p><\/div>\n

Harris acknowledged that other developing countries like Poland, India and Chile had all experienced a similar currency depreciation as part of the generalised shift of sentiment around emerging markets.<\/p>\n

“But South Africa\u2019s depreciation has been an order-of-magnitude worse – indicating structural problems in our economy and a lack of confidence on the part of the markets,” Harris said.<\/p>\n

“Government\u2019s inability to contain increases in the fiscal and current account deficits has probably been a major contributor to Rand weakness, and our overly rigid labour regime – which entrenches the power of majority labour unions and worsens the negative effect of industrial action – has driven negative sentiment amongst investors.”<\/p>\n

According to the shadow minister, the effect of this sentiment has been compounded by increases in debt service costs of 6.4% per annum, as well as in compensation of government employees of 8.3% per annum between 2008 and 2012.<\/p>\n

“Along with generalised increases in administered prices, the Monetary Policy Committee really had no choice yesterday but to increase interest rates,” Harris said.<\/p>\n

“The move was necessary to combat inflation driven by government\u2019s economic mismanagement, but our economy will suffer as a result.”<\/p>\n

More on SA’s economy<\/h3>\n

Rate hikes fail to stem emerging market pressure<\/a><\/strong><\/p>\n

Marcus announces rate hike, rand weakens<\/a><\/strong><\/p>\n

Where to for punch-drunk rand in 2014?<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The Democratic Alliance (DA) has blamed economic mismanagement by the ANC government as one of the major factors leading to a rate hike and a steep drop in the local currency.<\/p>\n","protected":false},"author":10,"featured_media":28250,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[1875,2061,1740,26,3670,1631],"class_list":["post-52473","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-anc","tag-democratic-alliance","tag-economy","tag-headline","tag-rand","tag-tim-harris"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/52473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=52473"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/52473\/revisions"}],"predecessor-version":[{"id":52510,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/52473\/revisions\/52510"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/28250"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=52473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=52473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=52473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}