Countries are becoming competitive in terms of currencies in an effort to keep their economies going, he said. “But this could result in a trade war where countries will put up barriers.”Gordhan said the rand, which has strengthened consistently behind high foreign investment flows, was in “serious danger of competitive devaluation”.
Other emerging markets, such as Brazil, Turkey and China, have moved to weaken their currencies, but South Africa’s Reserve Bank governor Gill Marcus has said South Africa can’t afford to act this aggressively. National Treasury director general Lesetja Kganyago explained that fiddling with currencies required “deep pockets”, and that “South Africa doesn’t particularly have deep pockets”. South Africa’s rand has gained close on 30% against the dollar since 2009, depressing exports and economic growth.
In the Queen pineapple producing region of Hluhluwe in northern KZN, for example, 2009 exports were down 50% from 10 years ago, from 102 million 4kg-cartons to 520 000 cartons. Chairperson of the Hluhluwe Queen Pineapple Marketing Association Pieter de Jager said, “the strong rand makes exports difficult as does the high cost of air-freight”. Low export prices are especially tough on smallscale pineapple growers, with the number of farmers having dropped from 100 farmers 20 years ago to 12 today.
Agricultural Business Chamber (ABC) CEO Dr John Purchase said the US’s moves to devalue the dollar were motivated by their desire to stimulate manufacturing. “Developed countries, especially those like the US and even Japan, are in serious trouble in terms of their government debt levels. They are trying to grow their export base.”
The ABC recently held a meeting with Exim, the Export-Import Bank which falls under the US government. “They indicated that they are strongly trying to finance and grow US exports,” said Dr Purchase. South African farmers will now be able to acquire machinery, especially specialised equipment, at reduced prices, he said.
