Answer to Question #236571 in Economics for Justy

Question

The Namibian economy is closely linked to South Africa with the Namibian dollar pegged to the South African rand. Discuss the monetary arrangement & the peg and how it works. Please refer to the Common Monetary Area (CMA). Hint: Consult Bank of Namibia website. 

Answer 1

The Common Monetary Area (CMA) links South Africa, Namibia, Lesotho and Eswatini into a monetary union. It is allied to the Southern African Customs Union (SACU). The main purpose of this trade is that all of the parties can have the same development and equitable economic advance so they can be treated as a whole.

The Rand is still considered legal tender in Namibia. The Namibia Dollar is pegged to the Rand at a rate of 1:1.