The South African rand weakened as investors await GDP data and assess the implications of U.S. tariffs announced by President Trump. At 0715 GMT, the rand traded at 18.64 against the dollar, down 0.3%. Economists predict a 0.9% GDP growth, but budget disagreements within the ruling coalition continue to pose risks. The Johannesburg Top-40 index fell by 0.7% as the bond market remained stable.
On March 4, 2023, the South African rand experienced a decline ahead of the release of local gross domestic product (GDP) data, with added pressure from the implications of tariffs announced by U.S. President Donald Trump. At 0715 GMT, the rand was recorded at 18.64 against the U.S. dollar, which indicated a decrease of approximately 0.3% from the previous closing figure. Concurrently, the U.S. dollar presented a slight drop when compared to a variety of currencies.
President Trump declared that starting March 5, 25% tariffs on imports from Canada and Mexico would be enacted, with reciprocal tariffs to commence on April 2. Domestic investors are poised to analyze the forthcoming fourth quarter GDP data, scheduled for release at 0930 GMT, as it will provide insight into the performance of South Africa’s industrialized economy, with a 0.9% growth anticipated by economists surveyed by Reuters.
Currency strategist Andre Cilliers from TreasuryONE noted that “A stronger (GDP) print could support ZAR (the rand), but budget concerns remain a risk factor,” referring to the challenges posed by the ruling coalition’s disagreement on the national budget, which delayed its announcement last month. In the Johannesburg Stock Exchange, the prominent Top-40 index recorded a decrease of about 0.7% in its last trade, while South Africa’s benchmark 2030 government bond yield remained stable at 9.085%.
In summary, the South African rand’s depreciation is occurring in anticipation of local GDP data and the impact of U.S. tariffs. The rand is currently trading lower against the dollar, and upcoming economic figures are expected to shed light on the country’s economic health amidst ongoing budgetary concerns. The market reaction remains cautious as both domestic and international factors influence the currency and economic outlook.
Original Source: www.cnbcafrica.com
