20100802
reuters

JOHANNESBURG (Reuters) - South Africa's ruling African National Congress is considering whether the country should impose tax on short-run capital inflows to arrest the strength of the local currency and make it more competitive.

The South African rand on Monday hit 7.2490, its strongest level against the dollar since April 13. On Tuesday it was trading 0.3 percent weaker at 7.3195 per dollar.

South Africa's powerful labour unions have been calling for currency intervention to keep the rand at 10 to the dollar to support the struggling manufacturing sector.

In a discussion document ahead of a mid-term policy debating meeting of the party's National General Council next month, the ANC said sustained growth required both supportive macro-economic strategies and micro-economic interventions to enhance the overall efficiency of the economy.

"In the very short run, the core priorities are finding ways to ensure a more competitive currency ... a central debate is whether South Africa should tax short-run capital inflows," the ANC document said.

A strong rand makes South African exports more expensive. The Organisation for Economic Cooperation and Development (OECD) has said the relatively strong currency is having an impact on Africa's biggest economy and the government could intervene more.