One of the factors that has contributed to the large fluctuations of the rand in the past has been the large oversold NOFP of the Bank. The Bank’s stated objective has been to eliminate this open position, which stood at $ 23,2 billion at the end of September 1998.
Although this is still consistent with the BSP’s view of a hump-shaped path for inflation in 2008 and 2009, we cannot afford to underestimate this old adversary of central banks. Inflation is at the very top of the BSP’s policy priorities.