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South Africa central bank hits back against Public Protector

20 June 2017

The Bank said in a statement on Tuesday that the ordered remedial action directing Parliament to change the Constitution to amend the Reserve Bank's powers, had had an immediate and negative impact on the markets and the exchange rate of the rand. A two-thirds majority of lawmakers is needed to change the constitution.

Nevertheless, he said, any changes to the central bank's mandate were unlikely to happen in the short to medium run given the legal resistance the SARB was likely to mount.

Nomura economist Peter Montalto said that the rand was taking a knock because it's "not a good headline ... it's a live wire issue".

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There were also fears the Public Protector's comments could contribute to policy uncertainty, with the Sarb cited by ratings agencies as a beacon of strength. You just need a new MPC (Monetary Policy Committee) mandate, which is done by a letter from the FinMin to MPC and can be done technically at any time.

The report was released on Monday morning, and that evening Reserve Bank governor Lesetja Kganyago stood up at the podium at the Centre for Education where he delivered the keynote address.

"We'll be opposing the judicial review application, we're still finalising the process of collating all the evidence which the president required".

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Currently, the Sarb's primary aim was to protect the value of the rand in the interests of balanced and sustainable growth, a key factor in inflation-targeting.

In an interview with 702 Talk Radio Busisiwe Mkhwebane also said that the central bank's mandate was focused on a "few commercial interests". The Ciex report alleged that R24 billion was unlawfully given out to Bankorp from 1985 to 1992 by the Reserve Bank (as a "lifeboat"/gift).

In December Zuma, who has denied wrongdoing and faced down calls for his resignation over a series of scandals that have plagued his administration, asked the High Court to set the report aside.

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