15-Oct-2010 7:45 AM

South Africa expresses concern for global 'currency war'

South Africa's Finance Minister Pravin Gordhan stated the G-20 nations must take the lead to prevent a global “currency war” in which each country tries to weaken its currency at the expense of others (Bloomberg, 14/15-Oct-2010). Mr Gordhan said: “Everybody would want to depreciate their currency, everybody wants to export their way out of trouble,” adding that unless the G-20 gets “the major players to sit around the table and find a spirit of cooperation and generosity and give and take”, we are heading for a “currency war". The rand is at the strongest level in two-and-a-half years, with Mr Gordhan warning: "Very legitimately, the mining sector, the agricultural sector and the manufacturing sector are all finding themselves in serious trouble. We are rendering that part of our economy uncompetitive. You have got to find a balance.” He added that South Africa’s current account deficit was expected to widen “gradually” over the next three fiscal years, as domestic demand and exports increase. Separately, Central Bank Governor Gill Marcus stated South Africa is looking at the type of actions other countries have taken to curb their currencies and is in talks with the National Treasury on how to proceed.

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