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To: Wade who wrote (1131)	12/7/2003 1:00:37 PM
From: Wade	Respond to of 48092

Old news. businessday.co.za Experts beg Mboweni to stop talking up the rand -------------------------------------------------------------------------------- Currency movements have been to detriment of exporters and growth ECONOMISTS pleaded yesterday with Reserve Bank governor Tito Mboweni and Finance Minister Trevor Manuel to stop mouthing off about the rand, saying their statements had caused exaggerated currency movements to the detriment of exporters and economic growth. The call came as the rand soared to fresh highs against the dollar, reaching R6,6389 its best since April 2000 as the gold price inched towards 400/oz and the dollar continued to plummet against major currencies. The rand fell back later to R6,71 against the dollar, from its previous close of R6,7075. Nedcor chief economist Dennis Dykes and Prof Ben Smit of Stellenbosch University's Bureau for Economic Research told Parliament's standing committee on finance that official commentary on the rand should be avoided. "We think it would be a negative development if you had ministers coming out and saying we think the rand is really too strong and should fall significantly. Markets would tend to move very quickly. "It is a much more difficult task keeping a currency propped up than preventing it from appreciating," Dykes said. "Most people in the market would say there should be a lack of commentary altogether. Rather just don't say anything about it," he said. Smit said most of the talking was from Mboweni, rather than Manuel, who had been "much more cautious". Mboweni, who was criticised earlier this year for saying that the rand remained undervalued at levels around R7,70, has refrained recently from expressing an opining on the rand's level. However, Manuel once again expressed his concern about the effect of the rand on exports yesterday, saying a new task team between government and business would discuss a range of options available to stabilise the currency. These included pegging the currency, lifting remaining exchange controls and increasing Bank intervention in the foreign exchange markets. Dykes believed the rand had moved closer to its fair value on a long-term purchasing power parity basis. However, its 65% gain against the dollar since last year has eroded export earnings, putting a strain on economic growth and threatening jobs. The rand's gains have also sent local equity markets plummeting this year, with the JSE Securities Exchange SA's all share index dropping 2,05% yesterday. Dykes said the short-term future of the rand depended on what view was taken of the dollar. If one assumed an unchanged trade-weighted basket of currencies, a relatively unchanged eurodollar exchange rate of between 1,17 and $1,30 and an appreciation of the rand, the rand should trade at between R5,90 and R6,30 to the dollar, which would be a nightmare for exporters. On a depreciating currency, one could expect the rand to trade between R7,35 and R7,80. These parameters assumed there were no change in fiscal and monetary policies. Nov 18 2003 07:33:05:000AM Linda Ensor and Nasreen Seria Business Day 1st Edition