London - South Africa's rand is no longer overvalued and too much currency weakness will carry risks for inflation, the country's finance minister said on Monday.
The rand has depreciated around 15 percent against the dollar since the start of the year and Pravin Gordhan said he would prefer to see less volatility in the currency market.
“(Rand) has overcome the overvalued status it had a few years ago but we all know that a balance must be found between benefits to exporters and the inflationary impact of an over-depreciated rand,” he told an investor conference.
“The market tends to overdo itself and that's what we are experiencing at the moment. Having said that the rand is an important shock absorber and will help our current account as well.”
Inflation is forecast this year at 5.9 percent, at the upper end of the central bank's 3-6 percent target range. - Reuters