Any consideration for more aggressive participation in the foreign exchange markets would also have to be carefully assessed against, among others, the prospects of success given the factors that may be driving the exchange rate in any particular direction at any given point in time. More aggressive intervention or pegging the rand to the US dollar would be a very costly exercise.
Firstly, how much foreign exchange reserves would be required to artificially peg the rand to the US dollar and to maintain this peg in the event of pressure to depreciate? South Africa’s reserves, at just over USD42 billion, are relatively low for that type of exercise.