Recent US actions have put pressure on emerging-market currencies, including the rand, says TreasuryOne currency strategist Andre Cilliers
03 February 2025 - 09:52
byJacqueline Mackenzie and Nompilo Goba
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The rand weakened along with other global currencies and the JSE opened about 1% lower as the local market faced the turmoil caused by US President Donald’s Trump latest policy actions
Reuters reported that Asian stock markets slumped on Monday and European and US equity futures pointed sharply lower after Trump’s tariffs on Canada, Mexico and China triggered the fear of a broad trade war and a hit to global growth.
Specific to SA, Trump said he would cut off funding, citing land confiscations.
“SA is confiscating land, and treating certain classes of people VERY BADLY,” Trump said in a Truth Social post on Sunday. “I will be cutting off all future funding to SA until a full investigation of this situation has been completed!” he said, according to Reuters.
SA’s foreign ministry responded by saying, “We trust President Trump’s advisers will make use of the investigative period to attain a thorough understanding of SA’s policies within the framework of a constitutional democracy.
“This approach will promote a well-informed viewpoint that values and recognises our nation’s dedication to democratic ideals and governance. It may become clear that our Expropriation Act is not exceptional, as many countries have similar legislation.”
The rand was last trading at R18.92 compared with Friday’s close of R18.67 — 1.35% weaker, according to Moneyweb data. The JSE all share index was 1.16% lower at 84,963.47 in early trade.
TreasuryOne currency strategist Andre Cilliers said that recent US actions, including tariffs on Mexico and Canada, had led to a significant weakening of emerging-market currencies, including the rand.
He said a key concern was the US scrutiny of SA’s land expropriation policies, which had resulted in an investigation and the suspension of future funding. This had placed SA under the international spotlight, which could have serious consequences for its trade relationship with the US, one of the country’s largest economic partners.
He explained that while no tariffs had been imposed on SA yet, the possibility of trade restrictions had increased, which could negatively affect the country’s stock market, bond markets, and overall investment climate.
He said the agricultural sector, in particular, could suffer from these developments.
He also warned that the suspension of funding could affect critical sectors such as healthcare, especially research in areas like HIV treatment.
If the tension kept rising, he said, it could lead to job losses and further economic instability, worsening SA’s already high unemployment rate. Ultimately, he said that the geopolitical tension could result in long-term economic weakness for the country.
“He has not imposed any tariffs as yet, but the possibility of that now becomes increased and that could have a negative effect on our stock exchange, our bond markets, our investments. It just places us under the spotlight ... sometimes you want to fly under the radar and not directly into the spotlight. But that is what we have done now. We are under the spotlight. We are under investigation,” he said.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Rand and JSE feel the heat of Trump’s policies
Recent US actions have put pressure on emerging-market currencies, including the rand, says TreasuryOne currency strategist Andre Cilliers
The rand weakened along with other global currencies and the JSE opened about 1% lower as the local market faced the turmoil caused by US President Donald’s Trump latest policy actions
Reuters reported that Asian stock markets slumped on Monday and European and US equity futures pointed sharply lower after Trump’s tariffs on Canada, Mexico and China triggered the fear of a broad trade war and a hit to global growth.
Specific to SA, Trump said he would cut off funding, citing land confiscations.
“SA is confiscating land, and treating certain classes of people VERY BADLY,” Trump said in a Truth Social post on Sunday. “I will be cutting off all future funding to SA until a full investigation of this situation has been completed!” he said, according to Reuters.
SA’s foreign ministry responded by saying, “We trust President Trump’s advisers will make use of the investigative period to attain a thorough understanding of SA’s policies within the framework of a constitutional democracy.
“This approach will promote a well-informed viewpoint that values and recognises our nation’s dedication to democratic ideals and governance. It may become clear that our Expropriation Act is not exceptional, as many countries have similar legislation.”
The rand was last trading at R18.92 compared with Friday’s close of R18.67 — 1.35% weaker, according to Moneyweb data. The JSE all share index was 1.16% lower at 84,963.47 in early trade.
TreasuryOne currency strategist Andre Cilliers said that recent US actions, including tariffs on Mexico and Canada, had led to a significant weakening of emerging-market currencies, including the rand.
He said a key concern was the US scrutiny of SA’s land expropriation policies, which had resulted in an investigation and the suspension of future funding. This had placed SA under the international spotlight, which could have serious consequences for its trade relationship with the US, one of the country’s largest economic partners.
He explained that while no tariffs had been imposed on SA yet, the possibility of trade restrictions had increased, which could negatively affect the country’s stock market, bond markets, and overall investment climate.
He said the agricultural sector, in particular, could suffer from these developments.
He also warned that the suspension of funding could affect critical sectors such as healthcare, especially research in areas like HIV treatment.
If the tension kept rising, he said, it could lead to job losses and further economic instability, worsening SA’s already high unemployment rate. Ultimately, he said that the geopolitical tension could result in long-term economic weakness for the country.
“He has not imposed any tariffs as yet, but the possibility of that now becomes increased and that could have a negative effect on our stock exchange, our bond markets, our investments. It just places us under the spotlight ... sometimes you want to fly under the radar and not directly into the spotlight. But that is what we have done now. We are under the spotlight. We are under investigation,” he said.
mackenziej@arena.africa
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