Promoting Dialogue on Trade Reform in South Africa: Trade, Industrial Policies and the Exchange Rate

The text presents a debate over whether South Africa should intervene to weaken its currency to support manufacturing and employment or maintain a stronger currency to lower inflation and financing costs. It notes that a government task team is evaluating the efficacy of managed floating versus flexible exchange rate systems and their impacts on trade and industrial policies.

• Proponents of currency intervention argue that a lower currency is necessary for the South African manufacturing industry to export competitively and resist cheap imports, and they view currency appreciation as the primary driver of job losses. Some suggest the central bank's mandate should be expanded to include currency management.
• Opponents of intervention argue that South Africa lacks sufficient foreign exchange reserves to weaken the currency sustainably and that the rand's recovery reflects a global normalization of investor appetite for emerging market assets. They contend that seeking competitive devaluations delays necessary structural reforms, productivity, and diversification efforts.
• A stronger rand is identified as providing several economic benefits: reducing the risk premium on local financial assets (lowering financing costs), lowering the inflation rate, and reducing the cost of imported components for infrastructure investment, which eases pressure on public finances.
• A government task team is currently investigating currency management, specifically assessing the efficacy and feasibility of managed floating versus flexible exchange rate systems and their subsequent effects on industrial and trade policies.

APA

South African Institute of International Affairs (2010). Promoting Dialogue on Trade Reform in South Africa: Trade, Industrial Policies and the Exchange Rate. https://saiia.org.za/research/promoting-dialogue-on-trade-reform-in-south-africa-trade-industrial-policies-and-the-exchange-rate-march-2010/

Chicago

South African Institute of International Affairs. Promoting Dialogue on Trade Reform in South Africa: Trade, Industrial Policies and the Exchange Rate. 2010. https://saiia.org.za/research/promoting-dialogue-on-trade-reform-in-south-africa-trade-industrial-policies-and-the-exchange-rate-march-2010/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Promoting Dialogue on Trade Reform in South Africa: Trade, Industrial Policies and the Exchange Rate |date=28 March 2010 |url=https://saiia.org.za/research/promoting-dialogue-on-trade-reform-in-south-africa-trade-industrial-policies-and-the-exchange-rate-march-2010/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2010promoting, author = {{South African Institute of International Affairs}}, title = {{Promoting Dialogue on Trade Reform in South Africa: Trade, Industrial Policies and the Exchange Rate}}, institution = {South African Institute of International Affairs}, year = {2010}, month = mar, url = {https://saiia.org.za/research/promoting-dialogue-on-trade-reform-in-south-africa-trade-industrial-policies-and-the-exchange-rate-march-2010/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }