Namibia not de-linking from SA Rand: BoN

24 Dec 2018 14:10pm
WINDHOEK, 24 DEC (NAMPA) – De-linking the Namibia Dollar from the South African Rand could lead to high inflation and negatively impact the country, the Bank of Namibia (BoN) said on Monday.
In a media statement, the bank said the peg arrangement remains in the best interest of Namibia, as it continues to achieve the primary objective of price stability, through a peg exchange rate regime with an ultimate aim of promoting economic growth and development.
The statement follows reports circulating online that Namibia was considering exiting from the currency peg arrangement (one-to-one between the two currencies) established as part of the Common Monetary Area Agreement.
“The bank has consistently, as part of its mandate and as the organ responsible for the implementation of the exchange rate arrangement, made it known that it conducts assessments on the sustainability of the current arrangement from time to time,” BoN Deputy Governor, Ebson Uanguta said.
He added in the statement that the assessments that continue to inform its policy advice to Government, concluded that the benefits from the current fixed exchange rate arrangement between the two currencies outweigh the costs.
Furthermore, Namibia’s current trade structure shows that about 60 per cent of goods in Namibia are imported from South Africa, and the peg arrangement continues to save the country substantive transactional costs.
Currently, Namibians who import goods from South Africa do not incur transactional costs, which would be the case if the Namibia Dollar was not linked to the Rand, Uanguta said.
Tourism and travel between Namibia and South Africa are boosted in both directions due to the absence of an exchange rate risk, the bank also said.