JSE launches index to track rand

| Tuesday November 2, 2010 00:00

The Rand Index (RAIN), as it will be known, is aimed at the asset management industry as well as economists, importers and exporters.

The index will start trading next Monday November 8. The rand has rallied against major currencies over the last few months, making SA's exports less competitive.

There has been debate around whether the Reserve Bank should intervene or not. It has said it would buy more foreign reserves and the treasury has announced a loosening of foreign exchange controls. This would hopefully curb the currency's strength, some analysts have said. The RAIN will track the movement of the Rand against the currencies of SA's top five major international trading partners (the Euro, US Dollar, Chinese Yuan, UK Pound and Japanese Yen), providing a much-needed public benchmarking tool, the JSE said yesterday.

The representative weight of each currency in the index will be calculated from audited import and export data of physical goods from the South African Revenue Service. The data is currently only available two months in arrears. 'We believe the Index will be particularly useful to those users wanting to measure the competitiveness of South African goods in international import and export markets,' said JSE director, Allan Thomson. The RAIN will be calculated and distributed daily by the JSE at 15h00 and 17h00. A review of the inclusion of each of the five currencies and changes in individual currency weightings will take place annually at an index review.

The JSE will then communicate any changes to currencies that make up the index or their weighting to the market.-(Businessday)