The South African Reserve Bank (SARB) said on Tuesday in its latest Monetary Policy Review that there appears to be an increased risk premium that investors require for holding the rand given its volatility and increasing concerns about the current account deficit.

The Bank said the movements of the rand since December 2007 partly reflect increases risk aversion by investors towards emerging markets in the wake of the sub-prime crisis.

It adds that electricity supply constraints may also have affected investor perceptions regarding SA's growth prospects.

The trade-weighted rand depreciated from 81.6 index points on 1 November 2007 to 67.6 on 30 April 2008, a decline of 17.1 percent.

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