Despite what South Africa is going through at the moment with load shedding and low investor confidence, Lesetja Kganyago, governor of the SA Reserve Bank believes the country is the right place for investors to come and invest.
The central bank governor told the American investors at the New York Stock Exchange that South Africa’s financial markets are deep, robust, and well integrated with world markets.
“Financial system assets are nearly 300% of GDP, roughly three times the emerging market average, said Kganyago.
The governor was part of the delegation of the Johannesburg Stock Exchange [JSE] to the New York Stock Exchange, as both bourses signed a new memorandum of understanding to collaborate on dual listings of exchange-traded funds and digital assets.
Kganyago added that the rand is another reason the prices of South African assets are attractive, saying that the Reserve Bank is “very tolerant of exchange rate fluctuations”.
“This is because we have low levels of foreign exchange debt, and we have inflation expectations that do not react strongly to exchange rate movements.”
“This means the currency is free to adjust to global conditions, and when it depreciates, as it has done recently, it makes South African assets very attractive in foreign currency terms. You could say this is a strategy of attracting the smart money: when the currency moves a lot the smartest people buy, and this helps reverse the outflows,” he concludes.
