South Africa Imposes New Controls to Bolster Value of Sagging Currency

JOHANNESBURG, South Africa â€”  The South African government imposed new foreign exchange controls Friday in an attempt to bolster its currency, whose value has plunged because of international concern over continued riots against apartheid.

The rand was worth $1.25 four years ago but fell to 34.80 cents in August, a year after rage against white-minority rule began sweeping through the nation’s black townships.

Controls were imposed Sept. 1. The rand rebounded slightly, but in recent weeks it had slipped as low as 36.80 cents.

Finance Minister Barend du Plessis announced technical changes in the foreign exchange rules Friday night. He said the government would pay gold mines entirely in rands for gold purchases, not half in dollars as in the past, to reduce the demand on foreign exchange reserves.

The government buys all gold produced by the mines, then sells it abroad. Gold produces half of South Africa’s foreign earnings.

A requirement that exporters return foreign earnings to South Africa more quickly is another regulation in the complex set of changes.

Loan Renewals Halted

The rand fell precipitously this year when foreign banks stopped routine renewals of short-term loans because the persistent violence made them uncertain of South Africa’s economic stability.

South African institutions were unable to meet the sudden demands for repayment. On Sept. 1, the government imposed a moratorium through Dec. 1 on repayment of nearly all foreign loans, and later said the repayment freeze would be extended into next year.

Interest payments are not affected.

The economy is in its worst recession in half a century. Inflation stands at an annual rate of 16.8%, largely because of the weak rand and high unemployment.