Nobel Memorial Prize winning economist professor Joseph Stiglitz has once again encouraged South Africa to take a more interventionist stance to weaken its exchange rate, saying that commodity-rich countries are correct to actively respond to the threat posed by over-valued currencies.

Stiglitz said at a lecture in Pretoria on Monday that countries all over the world were becoming increasingly active in implementing programmes designed to weaken and/or stabilise their currencies. The mechanisms ranged from capital controls and taxes, to prudential regulations on the banks.

The South African government, which officially supports a so-called competitive and stable exchange rate, was currently considering various interventionist options, having already given the South African Reserve Bank a mandate to accumulate reserves in a bid to weaken the rand.

The South African unit was among the best-performing currencies in 2011, having rallied to its strongest level since December 2007, late last month. But it has weakened in the first few weeks of 2011.

“South Africa has a particular problem, that’s shared by a number of others, of having the good fortune of having lots of resources. But that leads to the natural-resource curse of a high exchange rate that leads to . . . what I call ‘rich countries with poor people’.”

High exchange rates during periods of commodity strength undermined a country’s export competitiveness, which commonly led to unemployment and undermined economic diversification.

A “long-run problem” that was being exacerbated by the US Federal Reserve’s policy of quantitative easing, which Stiglitz described as a 21st century version of a “beggar-thy-neighbour” policy.

"It’s against modern fashion to talk about control, so the current language is: capital account management,” Stiglitz said, adding that he fully supported such intervention, highlighting, in particular, the recent interventionist stance taken by Chile’s “centre-Right government”.

He also argued that it would become increasingly difficult for South Africa to remain on the exchange-rate sidelines when other emerging markets were “putting up barriers”.

“What does that mean? It means that the money will go to those countries that are foolish enough not yet to have put up barriers.”