Washington — Policy makers will only respond to changes in the exchange rate if they could cause inflation to rise, says Reserve Bank governor Lesetja Kganyago. "Our approach in SA has been and continues to be that we do not react to the first-round effect of depreciation or appreciation of the currency," Kganyago said in a forum discussion in Washington. "We will only act to the extent that we think the depreciation of the currency would lead to a rise in inflation," he said. Kganyago was speaking ahead of meetings of the International Monetary Fund and World Bank, at which finance ministers and policy makers have gathered to discuss potential threats to global economic expansion. He noted that rising interest rates in developed nations could prompt capital to flee emerging markets and cause their currencies to weaken. Currency depreciation can fuel inflation by raising the price of imports. SA’s economy had reduced some of its key vulnerabilities such as the size of its current ac...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as articles from our international business news partners; ProfileData financial data; and digital access to the Sunday Times and Sunday Times Daily.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now