however, the view that we prefer a strong rand to a weak rand is not well - founded. ideally, what we would like to see is an appropriately valued stable exchange rate, one that is not a significant issue for inflation. however, that is in an ideal world. in reality, the exchange rate is buffeted by a number of fundamentals which require adjusting to ; in south africa ’ s case, these fundamentals include commodity - price changes and capital flows. over time, we have learned the hard way that trying to ‘ lean against the wind ’ in the face of markedly changing fundamentals can be both futile and expensive, and any success in this respect is likely to be short - lived at best. that is not to say that we will never get involved, particularly in the event of liquidity drying up in the market. that said, let me be clear : no amount of central bank intervention, no matter how well intentioned, can prevent an exchangerate adjustment from aligning with fundamentals. the best contribution that the bank can make bis central bankers ’ speeches to competitiveness is to ensure that inflation is contained to the extent possible during periods of rand weakness to ensure that the depreciation is real. it is then up to the relevant sectors to take advantage of the increase in competitiveness. conclusion in conclusion, the domestic economy is facing a challenging future. while the global economy is a constraint, it is important that we do not focus on that only and ignore the very real domestic impediments to growth as well as the opportunities. it is too easy to sit back and bemoan the fact that we are hostage to global developments. there are things that can be done, many of which are clearly spelled out in the national development plan. we often hear about a focus on infrastructure, but we always seem to under - deliver in this respect. if south africa wants to develop its industrial sector, it needs to improve its infrastructure apart from electricity. there also needs to be policy coherence and less regulatory uncertainty. if we are to succeed in reducing unemployment, we must have a growing, competitive economy. competitiveness is not simply about the exchange rate ; it is a multidimensional concept. these dimensions include the quality of goods and services produced, reliability of delivery, reliable and appropriate infrastructure, appropriate technologies, appropriate and sufficient skills, the ease of doing business, and the minimisation of red tape. our financial sector is regarded as one of the most

that it makes the aim of monetary policy much clearer, ie the achievement of an average annual increase of 3 to 6 % for cpix inflation in 2002. the government chose to set the 3 to 6 % target level. the setting of monetary policy instrument values ( like the level of the “ repo rate ” ) is entirely up to the reserve bank. therefore the inflation - targeting variable chosen provides for the instrument independence of the reserve bank, but not goal independence. by means of the mission statement and an explanatory memorandum about the adoption of an inflation - targeting monetary policy framework, the public has been informed about the objectives of monetary policy. on the basis of this information the public can therefore evaluate the actions of the reserve bank in attaining these objectives. 6. transparency of monetary policy the south african reserve bank also fulfils the second condition for independence, namely transparency. government and the public are provided with a stream of information on the monetary policy stance. some of my staff and i regularly appear before the parliamentary portfolio committee on finance. we also issue comprehensive statements following each meeting of the bank ’ s monetary policy committee. the reserve bank ’ s quarterly bulletin, annual economic report and governor ’ s address at the annual meeting of shareholders provide comprehensive analyses of macroeconomic events. a six - monthly monetary policy review will soon be introduced, describing in more detail the decisions taken by the reserve bank. policy is also explained by the governors of the bank and comments on policy are heard at the monetary policy forum meetings. these meetings are held twice a year in the main centres - at least one in each province - and involve organised business, labour, politicians, academics and the media. 7. institutional independence in south africa finally, the present institutional framework in south africa in the form of the south african reserve bank act, act no 90 of 1989, allows the reserve bank a great degree of autonomy in its operations. the reserve bank ’ s functional independence in monetary and related policies is clearly stated in sections 10 and 35 of the south african reserve bank act. section 35 empowers the board of the bank to make rules “ for the good government of the bank and the conduct of its business ”. in section 10 the powers and duties of the central bank are spelled out in great detail. most of the functions described in this section are the normal functions that one would expect a central bank to perform. section 10 ( 2 ) also clearly states that “ the rates at which the bank will discount or redis