Former South African Reserve Bank Governor Tito Mboweni says he is in favour of a stable exchange rate at whatever level. Speaking at a graduation ceremony at the University of the Witwatersrand on Tuesday‚ Mboweni said it seemed that nobody in South Africa‚ “except Ministers Rob Davies and Ibrahim Patel”‚ would love to live in a country with a weaker exchange rate of the Rand.“I suspect that even those two gentlemen would not want to see our exchange rate at these levels for long‚” he stated.“And the myth they (these two ministers) have been peddling around that the weaker exchange rate would be the saviour of the manufacturing sector has been exposed as being both theoretically and empirically weak‚” he added.An exchange rate could not be a proxy for industrial policy.“In fact‚ the policy conflicts in our government needs to be sorted out. Better coordination and leadership is required‚” Mboweni said.He added: “Back to the exchange rate. I am in favour of a stable exchange rate at whatever level. The exchange rate‚ ceteris paribus‚ is an important automatic stabiliser in any economy with a floating system. But the economics problem we are facing today is that this assumption is not applying.“We have conflicting and nationalistic economic policies around the world. The global institutions which are supposed to bring about some form of global coordination of policies are failing us: the G20‚ the IMF‚ and the BIS‚ OECD‚ etc. Its dog eats dog out there.“At the end of the day‚ the US Fed is going to start raising the federal funds rate. They have already ceased QE. This has already been factored into the market. Long rates are now indicating a Fed Funds Rate increase in December or by March next year.“And here is the thing about the globalised financial markets. Now that they have already priced in a fed funds rate increase‚ they are trading on the interest differential between South Africa and the US in search of yield.”South Africa’s central bank was fully aware of this and was watching the US markets very closely and they were doing a good job‚ Mboweni said.“So going forward‚ one should expect the Rand exchange rate to be a bit volatile but will settle at an equilibrium level consistent with the automatic stabiliser role that I spoke about‚ subject to data and global policies being more clear and certain.“I know that this does not bring any comfort to any importer‚ exporter or those planning a holiday in Bali this December‚” he added...