Page 161 - SARB: 100-Year Journey

Crashes, crises and credibility: Mboweni’s first term (1999−2004)
Governor Mboweni’s first term was characterised by extreme turmoil and currency volatility. Despite this, the SARB was able to weather the successive crises because the central bank had adopted a system of working that incorporated anticipating and managing risk as part of its operating framework.
The first crisis to strike was the collapse of the Thai baht, signalling the start of the Asian crisis. “I can remember the consternation on the faces of the senior authorities at that time, [thinking] how does this thing in Thailand create a tidal wave?” Guma said.
Stals was still Governor, and proceeded to defend the local currency from the fallout. The outcome was a widening in South Africa’s NOFP. When Mboweni assumed his duties as Governor, this was one of the pertinent issues he had to address.
Trevor Manuel, the former Minister of Finance, said: “One of the key issues was the NOFP. We had to discuss this thing ... because the NOFP was, I think, US$27 billion, give or take. The question was, how were ... [we] going to work this down because what had existed was the reserve with a negative sign in front.”
‘[It] ... was such a huge issue for us as the Bank and the National Treasury. We had accumulated a whole lot of liabilities which needed to be met in the future,” Guma confirmed.
“I got there in 1999. [We] were being welcomed back into the international community,” said Daniel Mminele, whose entry into the Bank bears testament to former Governor Mboweni’s powers of persuasion and erstwhile Senior Deputy Governor James Cross’s eye for talent. Mminele’s recruitment to the Bank thrust him into the NOFP troubles.
“The existence of that [NOFP] was a source of great external vulnerability for South Africa,” said Mminele, adding, “and as you know, it had been built up through intervention strategies prior as part and parcel of seeking to defend the currency.”
That was before the exchange rate regime was allowed to float freely in around 1999. Subsequent to this, it was decided that the value of the rand would be determined mainly by the forces of supply and demand in the market.
President Thabo Mbeki, whose term in office began in 1999, Mboweni made history in 1999 as the first black person to Trevor Manuel, the former Minister of Finance. when Mboweni officially assumed the governorship of the lead the SARB. /SARB /SeongJoon Cho/Bloomberg via Getty Images SARB. /Gallo Images
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