MIDRAND – Following the sudden drop in the value of the rand to the dollar, the South African Reserve Bank announced that new bank notes will now be printed on recycled paper.
The rand slumped to a five-year low as it weakened past the 11 per dollar mark for the first time since October 2008.
The Reserve Bank foresees that a reduction in the cost of producing new bank notes will increase the profit potential of buying South African currency, thereby improving its value to the dollar.
“If we make money cheaply you’ll get more out of it,” said Reserve Bank Governor Gill Marcus. “If you get more from it, it’s more valuable to you, and if it’s more valuable to you, it will become more valuable to the dollar.”
Furthermore, the Reserve Bank hopes that the new eco-friendly green image of the rand will also help to restore confidence in the currency. “We expect the R10 notes to do especially well, since they’re actually green in colour,” revealed Marcus.
Bloomberg financial news service reported that the Reserve Bank is considering the reintroduction of the old bank notes featuring the portrait of Jan van Riebeeck.
“Those notes date from a time that the rand was much stronger against the dollar, varying between the 1 and 3 per dollar mark,” affirmed Asher Lipson, a fixed-income strategist at Standard Bank Group Ltd. “Since those notes were worth more, reintroducing them could help restore the power of the rand.”
Jan van Riebeeck was the founder of the Cape Colony and first leader of the white settlers who came to the south of Africa in 1652. The Van Riebeeck notes were first introduced in 1961 when the rand was adopted, but were discontinued in 1992 and replaced by a series of animal designs.
The animal notes saw a severe drop in value, falling steadily to around the 7 per dollar mark before it stabilised. Later, however, it would continue its steady decline.
The present-day bank notes are graced by the image of Nelson Mandela, South Africa’s first democratically elected president, and were introduced in 2012. It was hoped that Madiba’s image would help stop the depreciation caused by the animals, but the plan did not succeed.
Finance Minister Pravin Gordhan denied any plans to reintroduce the Van Riebeecks. “I’m just going to sit back, have another glass of 12 year old single malt whiskey and wait for all this to blow over,” he muttered. “We’ll stick with the Randelas for now.” – BN
**Article originally posted on Banana Newsline**