Pretoria - Finance Minister Pravin Gordhan on Friday joined China, Brazil and Germany in criticising the latest economic stimulus measures of the US Federal Reserve, saying the move undermined multi-lateralism.
On Wednesday the US Federal Reserve announced plans to pump an additional $600bn into its economy to stimulate the sluggish recovery.
On Friday Gordhan said most of the $600bn would find its way into emerging markets, thus stregthening these countries' currencies - including the rand - "with devastating consequences for exports from developing countries".
The rand has stregthened 28% against the dollar since the begining of 2009, making SA's exports uncompetitive.
Brazil's finance minister has warned of a potential "currency war" as countries aim to weaken their currencies to support their exports.
Gordhan said South Africa was concerned at the second round of US stimulus - dubbed QE2 - as developing countries, including South Africa, "will bear the brunt of the US decision to open its flood gates without due consideration of the consequences for other nations".
He was also "disappointed" at the "unilateral" move which came ahead of the Group of 20 (G20) meeting in Korea next week and after finance ministers met two weeks ago.
The meeting in Seoul aims to find multilateral solutions to repairing the global economy, he said.
"The USA’s decision undermines the spirit of multilateral cooperation that G20 leaders have fought so hard to maintain during the current crisis," he said.
"It also runs contrary to the spirit in which G20 finance ministers and central bank governors met recently in South Korea, where they agreed that, given the high interdependence among nations in the global economic and financial system, uncoordinated responses would lead to worse outcomes for everyone."'Toxic waste'
The US dollar is increasingly becoming toxic waste, Investment Solutions economist Chris Hart said in reaction to Gordhan's statement.
Hart shared the minister's sentiments.
"I think that one of the strongest measures that we can take is to take our dollar reserves and convert that to gold. That would help us support ourselves," he said.
"The dollar is increasingly becoming toxic waste. Instead of funding the US government at the expense of our development, it would be better to support our own industries instead," he added.