Volatility in South Africa's exchange rate due to the eurozone debt crisis is hurting the country's competitiveness and may limit economic growth in the coming year, its trade and industry minister told Reuters on Sunday.
Rob Davies, visiting Dubai at the head of a trade mission, said the rand was still overvalued despite its slide against the dollar in August and September.
The currency plunged to a two-year low of 8.49 in late September from around 6.8 at the start of August, and has since rebounded to 7.89.
"We saw the rand becoming more competitive, moving from around 7 to around 8 to the dollar, which was a move and better than it was before, but still not at the level that places us in a competitive exchange rate," he said.
Davies declined to specify what exchange rate would be appropriate for the rand, but said that beyond its absolute level, its wide swings were hurting business sentiment. The shaky outlook for exports to Europe will weigh on South Africa's economic growth next year.
"We are rather cautious about our growth forecast for the year that lies ahead. Instead of nearly 4 percent, we are looking at something just around 3 percent for this coming year," Davies said.
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