PRETORIA (Reuters) - A South African court rejected on Tuesday a call by the anti-graft watchdog for the central bank to focus its monetary policy on boosting economic growth instead of on fighting inflation and keeping the rand currency stable.
Public Protector Busisiwe Mkhwebane, whose job is to ensure proper conduct in public office, sparked a political row and a big sell-off of the rand when she proposed the change in the central bank's monetary policy target in June.
High Court judge John Murphy said Mkhwebane's proposal lacked merit, in a ruling welcomed by the central bank and which was supportive for the rand.
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"She would do well to reflect more deeply on her conduct in this investigation and the criticism of her by the Governor of the Reserve Bank and the Speaker of Parliament," he said.
In June, central bank governor Lesetja Kganyago filed a court challenge to quash the recommendation, arguing that Mkhwebane went beyond the scope of her own mandate and describing the proposal as reckless.
Policymakers also warned that the political concerns and regulatory uncertainty caused by the proposal were harming investor sentiment towards South Africa, the continent's most industrialized economy.
Responding to the court verdict on Tuesday, Kganyago said: "We welcome the judgment and we will let the judgment speak for itself."
"The mandate of the Reserve Bank is spelt out in the constitution and that is what we had always argued for." he told reporters at a meeting of central bankers in Pretoria.
Mkhwebane said last month she would not defend her recommendation in court and she was not represented at a hearing for the case.
Spokeswomen Cleopatra Mosana said the Public Protector was studying the judgment and was not immediately able to comment.
The rand firmed by 0.26 percent after the ruling to 13.2850 per dollar, up from 13.3500.
South Africa's unemployment is at a 14-year high and key sectors of the economy, such as trade and manufacturing, are struggling as the country reels in recession.
(Reporting by Mfuneko Toyana and Olivia Kumwenda-Mtambo in Pretoria and TJ Strydom and Tanisha Heiberg in Johannesburg; Writing by James Macharia; Editing by Gareth Jones)