The rand weakened more than 1% to R18.24 against the US dollar, down from an over two-month high of R18.10 hit on 6 March, despite a weaker dollar, after US President Donald Trump announced plans to cut all federal funding to the country
Image: Picture: Henk Kruger/Independent Newspapers
The rand weakened more than 1% to R18.24 against the US dollar, down from an over two-month high of R18.10 hit on 6 March, despite a weaker dollar, after US President Donald Trump announced plans to cut all federal funding to the country.
The aid freeze comes as South Africa prepares a new trade proposal, amid concerns over the possible expiration of the African Growth and Opportunity Act (Agoa), which has facilitated billions in duty-free exports to the US.
Trump on Friday repeated his claims that South Africa was being terrible to long time farmers in the country.
“They are confiscating their land and farms, and much worse than that. A bad place to be right now, and we are stopping all Federal Funding,” Trump posted on his Truth Social platform.“To go a step further, any Farmer [with family!] from South Africa, seeking to flee that country for reasons of safety, will be invited into the United States of America with a rapid pathway to Citizenship. This process will begin immediately!"
Trump has recently suspended the President’s Emergency Plan for AIDS Relief (PEPFAR) funding to South Africa after signing an Executive Order to cut financial assistance to South Africa.
Wichard Cilliers, director and head of market risk at TreasuryONE, said the rand weakened amid Trump's criticism
“This marks the latest development in the escalating tensions between the two generally friendly nations, sparked by President Trump’s accusation that South Africa’s new land law discriminates against white citizens,” Cilliers said.
“The South African rand saw a sharp decline following renewed criticism of South Africa by Trump. The currency dropped as much as 1.1%, settling at R18.22 per dollar. Trump reiterated his claims on his Truth Social account, accusing South Africa of confiscating farmers' land and farms. He further announced that the United States would halt all federal funding to South Africa. This negative sentiment surrounding South Africa and Trump's rhetoric continued to weigh on the rand.”
The US dollar also came under pressure on Friday after the February jobs report showed weaker-than-expected growth in nonfarm payrolls.
The US economy added 143 000 jobs in January, below the anticipated 160 000 increase, contributing to concerns over economic slowdowns.
The news sent the EUR/USD pair soaring, with the euro reaching new highs near 1.0870, benefiting from the dollar's softness.
Investec chief economist, Annabel bishop, said the US has been highly active on the foreign policy agenda front, but feared universal tariff hikes have not materialised and many announced tariffs paused, reducing risk-off in markets and so benefiting the rand.
“The new US administration’s economic advisors recommend a modest tariff regime, and to generally avoid measures causing high inflation, calming markets, with the rand still tracking back towards its mid-December rate of below R18.00/$1,” Bishop said.
BUSINESS REPORT