South African Rand Strengthens Amid Tariff Uncertainty

JOHANNESBURG: The South African rand experienced gains on Thursday, buoyed by market anticipation regarding U.S. tariff policies and domestic investors awaiting updates on the coalition government’s stability amid ongoing budget disagreements.

As of 1355 GMT, the rand was trading at 18.775 against the U.S. dollar, reflecting an appreciation of approximately 0.3% compared to its previous closing value.

U.S. President Donald Trump engaged in discussions with Japanese officials on Wednesday, marking one of the initial rounds of direct negotiations following the implementation of extensive tariffs that disrupted global markets and heightened concerns about potential economic downturns.

Additionally, markets were evaluating remarks made by Federal Reserve Chair Jerome Powell, who cautioned about the potential for decelerated growth and increased inflation stemming from the tariffs.

Similar to other currencies sensitive to risk, the rand’s trajectory is influenced by global factors such as U.S. economic policy, in conjunction with internal dynamics.

Local investors are closely monitoring developments surrounding a budgetary impasse between the African National Congress (ANC) and the Democratic Alliance (DA), the two major parties within the coalition government. This disagreement centers on a proposed increase in the value-added tax slated for May 1.

The DA, which advocates for business interests, opposed the budget’s fiscal framework in parliament and is legally contesting the planned VAT increase.

ETM Analytics noted in a research publication that South Africa’s internal political events are unfolding within a broader context. If not addressed, they could exacerbate an already unstable international landscape.

In the stock market, the Top-40 index exhibited minimal change.

South Africa’s 2030 government bond demonstrated strength, with its yield declining by 2 basis points to 9.16%.