Swaziland will not abandon its currency link to the rand despite a sharp fall in the value of the South African currency, Swazi officials have said.

The lilangeni has been linked to the South African rand through a one-for-one exchange rate since its introduction in 1974.

Speaking in parliament on Thursday, acting finance minister Prince Guduza Dlamini said: "While it is true that the lilangeni has lost 40% of its value this past year as the rand has fallen against the US dollar, the Swazi economy is not large enough to sustain our own currency."

Most economists agree that the benefits of the linked exchange rate outweigh the disadvantages.

Vanishing king

One benefit is that the Swazi economy is cushioned against the impact of any domestic political uncertainty.

"Last May, King Mswati vanished for over a month, and there were rumours that he was poisoned," said Michael Matimela, an investment analyst at Swaziland Stockbrokers.

"Because he is an absolute monarch and has total control over the country, such news would send markets and the currency plummeting in other nations... but because of the rand linkage, there was no affect on the Swazi currency whatsoever."

The collapse in 2001 of the value of the rand is the subject of an official inquiry in South Africa.

The inquiry was set up after allegations of market manipulation.

Since the falls, the rand has recovered by almost 20% to stand at about 11 to the US dollar.