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19 Oct 2010 10:03
Finance Minister Pravin Gordhan warned on Tuesday that the so-called currency wars could lead to what he referred to as “trade wars” if they are allowed to continue.
Gordhan was speaking at the National Consumer Goods Council of South Africa’s annual conference.
“The danger that we face as the world is that in an effort to keep our own countries going, where each country tries to become competitive on the basis of the so-called competitive currencies, that will result in a currency war.
But this could result in a trade war where countries will put up barriers,” Gordhan said.
Strong currencies in emerging markets are currently the subject of debate in the global arena.
“We like to refer to the strength of the rand; what we have right now is the serious danger of competitive devaluation,” he said.
Gordhan suggested that the next national aspiration after the Soccer World Cup should be the development of “a thriving economy”, which he said would narrow the gap between rich and poor and create employment.
‘Crime to the poor’
Finance ministers and central bank governors who will meet in the next few days for the G20 meeting will have a lot on their agenda, according to Gordhan. South Africa will attend the meeting.
“They’ll have to work out whether they have the willingness to ensure that we put national interest second to global interest, that countries will need to give up something in order for everyone to benefit. We need a coordinated effort,” he said.
“If we understand currency dynamics, the singleness of purpose is how we develop a common strategy to build our economies,” he added.
The minister said that challenges for the retail sector include how the fixing of prices and other collusion practices impact the sector, other sectors and consumers.
“Fixing food prices is a crime to the poor. Competition authorities have done a lot in recent years to unearth uncompetitive behaviour,” he noted.—I-Net Bridge
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