Reserve Bank Governor on what Trump means for South Africa

Reserve Bank Governor Lesetja Kganyago has indicated what Donald Trump’s inauguration and subsequent presidency could mean for South Africa.

Speaking to Bloomberg’s Francine Lacqua at the World Economic Forum in Davos, Switzerland on Tuesday, Kganyago admitted that the South African Government was still relatively in the dark about Trump because his policy towards the country was still unclear.

“There’s been talk of a (US) fiscal stimulus, and if there is a fiscal stimulus, you would like to believe the US authorities will do a fiscal stimulus that will be in the best interests of the economy”.

Kganyago said that the appreciation of the dollar would impact emerging markets like South Africa.

This will first be noticeable through the trade sector as South African exports should become more competitive, he said.

Secondly, within the finance sector, the appreciation of the dollar will see rising debt burdens. A stronger dollar would give the US Federal Reserve room to normalise money policies faster – leading to a further reversal in capital flows to emerging markets, the governor said.

“Presidents move currencies all the time, it just happens that this one is using Twitter. Others use ordinary speeches and platforms,” Kganyago said of Trump’s use of the social media site.

“The problem we are facing now is an increasing  environment of uncertainty, which makes determining policy a significant challenge,” Kganyago said.

“A combination of higher oil prices, an appreciating dollar which leads to a depreciation of emerging market currencies and food prices which are now rebounding from record lows could make for a very challenging monetary policy (in South Africa),” he said.

Read: Donald Trump only follows 41 people on Twitter – including this South African

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Reserve Bank Governor on what Trump means for South Africa