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South African finance minister Pravin Gordhan has called on the US Federal Reserve to remain mindful of the impact of its decisions on emerging markets as it continues with a programme of raising interest rates.
Speaking at the World Economic Forum in Davos, Mr Gordhan said the so-called ‘taper tantrum’ of 2013 reminded investors and policymakers of the strong links between global financial markets
“The Fed has shown a new kind of sensitivity to their decisions and the impact on emerging markets and we hope that will continue,” he said.
Now, he says pootential impacts on South Africa will ikely be limited, thanks in part to limits on foreign-currency debt levels. But he noted that other African countries have suffered greatly from the cost of servicing dollar debt along with depressed commodity prices.
He also noted that the Fed will be operating in an unusual environment under President Trump.
“The new administration has a particular political outlook, to put it politely, and the Fed has another. That will have implications.”