The July Institute Policy Public Research (IPPR) economic watch has noted that the Namibian dollar (N$) has slightly appreciated against BRICS countries, although it lost ground as compared to last year’s currencies.
“The Namibian dollar gained slightly since the beginning of the year against the Chinese Yuan (CNY) (1.5%) but strongly against the Russian rouble (RUB) (6.5%); while it lost value against the Indian Rupee (INR) (3.5%) and Brazilian Real (BRL) (6.6%). Compared to a year ago, the N$ has lost ground against all BRIC currencies. The depreciation is most notable with BRL (9.2%), CNY (7.6%) and INR 6.4%. while the military conflict in the Ukraine and subsequent economic sanctions by Western countries against Russia resulted in strong depreciation of the Russian rouble since January 2014.” IPPR said.
BRICS is an association of five major developing countries (Brazil, Russia, India, China and South Africa). As of 2014, they represent almost 3b people which are 40% of the world population with a combined nominal GDO of about N$ 160b (US$ 16b) and an estimated N$ 40 trillion in combined foreign reserves, BRICS represent 18% of the world economy.
However, IPPR Research Associate Klaus Schade in the economic report argues that the formation of the BRICS group of countries and their objectives of strengthening south - South Corporation has not yet had an impact on Namibia’s trade patterns.
The Namibian trade with the BRICS countries excluding South Africa between June 2008- June 2014 accounts for 4.3% of the country’s total trade value with imports valued at N$17.7b and exports of N$ 11.5b.
China clearly dominated Namibia’s imports and exports to BRICS countries accounting for 68% and 87% respectively. India was also an important source for imports (26%) but was the destination of only 6% of Namibia’s export to BRICS group. Were it not for the export of a vessel to Brazil in May 2014 to the tune of N$436.4m, export to Brazil would have been tangible,” he states.
On the other hand, the Namibian dollar has reversed previous trend and appreciated slightly against the Euro (2.3%) while it lost against the British ground (2.2%) and USD (0.1%) respectively compared to January. “Year on year it depreciated against the USD, GBP and Euro by 19.9%, 9.0% respectively and traded at 10.6%, 17.9 and 14.2 respectively.”
Schade noted the end of the protracted industrial actions in South Africa’s mining and afterwards steel and engineering sectors could restore the confidence and stabilise the currency.
“The increase in the repo rate by 25 basis points in July by the South African Reserve Bank (SARB) had temporary a positive impact on the exchange rate, because the country becomes a more attractive destination for financial investors. The interest rate increase was mainly caused by rising inflationary pressure (6.6% in SA compared 6.1% in Namibia) while the subdued economic performance and high unemployment rate would have suggested a rather accommodative monetary policy.”