BUSINESS NEWS - South Africa does not want a confrontation with the US, the Department of International Relations and Co-operation (Dirco) said yesterday after President-elect Donald Trump threatened to impose a 100% tariff on Brics countries if they launched a rival currency to the dollar.
According to an article by The Witness, Dirco spokesperson Chrispin Phiri said reports that the Brics countries were about to launch their own currency were untrue.
“Recent misreporting has led to the incorrect narrative that Brics is planning to create a new currency. This is not the case. The discussions within Brics focus on trading among member countries using their own national currencies. Brics leaders have called for a reformed international financial system to facilitate trade in local currencies.
“However, Brics is not discussing the creation of a common Brics currency. Instead, South Africa supports the increased use of national currencies in international trade and financial transactions to mitigate the impact of foreign exchange fluctuations, rather than focusing on de-dollarisation.”
The speculation that the Brics countries were planning to launch their own currency gained traction during last month’s Brics summit held in Russia.
During the summit, Russian President Vladimir Putin flashed a banknote, which some believed was the currency the Brics countries were intending to launch.
However, Phiri was adamant that the issue of an alternative currency to the US dollar was not part of the discussions during last month’s summit.
'Not the enemies’
Trump’s threat comes as South Africa this month assumed the role of chair of the G20 bloc composed of the US, UK and France.
Phiri said the Brics countries were not the enemies of either the US or any of the Western nations.
“All five initial Brics nations are members of the G20, alongside the United States.”
In a recent interview with The Witness, international relations expert Dr Sithembile Mbete of the University of Pretoria said the de-dollarisation proposed by Brics countries is unlikely.
She said this wasn’t a viable option yet because international trade was dominated by the West-controlled Society for Worldwide Interbank Financial Telecommunications banking system.
Mbete added that the Brics countries could use local currencies when trading with each other but would need to continue using the dollar when trading with the West.
Professor William Gumede, author of South Africa in Brics, also said he didn’t see any benefit for the rand if a Brics currency was created.
“So far, our biggest trading partners are in the West, and any change will knock our currency harder than others. Our currency will suffer the most.”
During the build-up to last month’s US presidential elections, Trump, who will officially assume his role as president next month, pledged to adopt protectionist policies should he win the elections.
South Africa, whose stance on the Israel/Palestine conflict is in direct confrontation with that of the US, is at risk of being kicked out of the Trump government’s African Growth and Opportunity Act (Agoa) programme, which allows some African countries to export their products to the US duty-free.
Trump’s warning on Saturday to the Brics countries was a strong indication that he would sideline South Africa from Agoa should the country continue to pursue what the White House perceives to be an anti-US foreign policy.
Read original story on witness.co.za
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