Despite Make America Great Again proponents slamming South African President Cyril Ramaphosa’s appointment of Mcebisi Jonas as South Africa’s Special Envoy to the United States on Monday, the local currency is holding its own.
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Despite Make America Great Again proponents slamming South African President Cyril Ramaphosa’s appointment of Mcebisi Jonas as South Africa’s Special Envoy to the United States on Monday, the local currency is holding its own.
The rand, which recently dropped to an all-time low and was flirting with R20 to the greenback, has since stabilised and broken through the R19 to the dollar mark. It is currently tracking well against both the New Zealand and Australian Dollars and was trading at R18.85 around noon, having started the day at R18.87.
Bianca Botes, director at Citadel Global, noted that the currency held its gains from Monday through to Tuesday. She added, however, it will continue to face volatility against an uncertain global backdrop.
Overnight, Jonas was called out by two right-wing and pro-Trump media outlets for allegedly calling US President Donald Trump a “racist,” “homophobe,” and “narcissistic right-winger” in a speech he made in 2020.
South Africa’s relationship with the States has been strained of late, and Ramaphosa seemingly deployed Jonas in a bid to help mend ties during Trump’s 90-day relaxation of trade tariffs.
Old Mutual chief economist, Johann Els, said that the rand was not being moved by concerns over Jonas’ appointment to the United States. He noted that the “rand moves mostly in tandem with global events”.
Els said that the local currency was back to where it was in January, and was almost back to January 2024 levels, when it was trading at levels of between R17 and R18 to the dollar.
“I doubt that there is much, if any, Government of National Unity (GNU) or Jonas impact,” Els said.
It was the news that South Africa would be charged import duties of as much as 30% on most items being exported to the US that sent the rand into a tailspin. The local currency was not alone: Trump’s announcement of higher-than-expected import taxes on “Liberation Day” – April 2 – caused shockwaves through markets across the globe including the United States’ S&P500.
Markets subsequently recovered when Trump pulled back on some of the tariffs, providing a 90-day grace period during which most of the taxes would move back to 10%. However, investors have remained jittery.
The currency has also recently been affected by worries that the GNU could fall apart if the DA left over its position on a proposed VAT increase, although these parties have seemingly mended ties with the news that the DA had never considered leaving the new administration.
Investec chief economist, Annabel Bishop, said on Monday afternoon that the improvement in the relationship recently between key political parties in the GNU has seen the prevailing high political risk premium weaken.
“Markets have seen some calm recently, and the rand is likely to continue to strengthen to the R18.60 mark, then see further strength this quarter,” Bishop said.
Els believes that, over the longer term, the local currency could strengthen to between R16 and R17 to the dollar and, at a push, the R15 to R16 range, which has a somewhat lower probability, but is not impossible.
In a statement on Jonas’ appointment issued by the Presidency on Monday, Ramaphosa noted that he would engage with the United States and foster partnerships in a bid to “promote our nation’s interests”.
The President added that South Africa and America had a long-standing relationship, and he was “committed to rebuilding and maintaining this relationship for more decades on the basis of mutual respect, recognition of each other’s sovereignty and benefit for our respective peoples”.
South Africa’s former ambassador to the United States, Ebrahim Rasool, was expelled by the Trump administration earlier this month and given three days to vacate the country. Rasool was declared persona non grata after apparently inferring that Trump was a right supremacist.
Trump has also taken umbrage with South Africa’s legislation, including the Expropriation Act, signed into law towards the end of January. This legislation allows the government to acquire land for public purposes or in the public interest in return for just and equitable compensation.
However, Trump viewed this as a racist move and subsequently offered white Afrikaans farmers – Boers – refuge in the United States should they seek it.
IOL
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