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IOL News
11 hours ago
- Business
- IOL News
How the Rand's pressure mounts ahead of key interest rate decision and US trade deadline
The rand is under pressure, hovering at R17.90 against the dollar. Image: Armand Hough /Independent Newspapers The South African Reserve Bank's interest rate decision on Thursday comes at a critical moment, just one day before South Africa's deadline to secure a trade deal with the US expires. Failure to reach an agreement could add 30% to the cost of exports to America, threatening thousands of jobs and weighing on economic growth, while the rand trades weaker near R17.90 against the dollar amid mounting uncertainty. Andre Cilliers, currency strategist at TreasuryONE, added that the rand is trading weaker around the R17.90 level as the rally in the dollar and the lack of any good news on the tariff front ahead of Friday's deadline weigh on the local currency. In Investec chief economist Annabel Bishop's weaky rand note, she said that the pending deadline to strike a deal with the US – with South Africa seemingly have not made progress – would be negative for the local currency. The trade tax order, signed by US President Donald Trump on July 7, follows a suspension of his April 2 'Liberation Day' tariffs, which he placed on pause following an extremely negative market reaction in America. The rand is hedgy ahead of the interest rate announcement and the Trump trade deadline. Image: Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The US dollar has risen on the optimism around the progress ahead of the deadline on Friday, which the US's Commerce Secretary Lutnick said will not be extended, and countries which have not struck deals will see July's reciprocal tariffs apply, said Bishop. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said It seems certain that South Africa isn't going to have a deal with the US by Friday. 'I expect that everyone is aware of this by now and there I don't expect a massive impact as we move into August,' he noted. More likely the loss of export revenue will weight on the trade balance adding negative pressure to the rand over time, said Wapenaar. 'Most industries won't really notice, while a handful of sectors, like auto manufacture, will suffer a significant impact,' he said. Wapenaar added that this will translate into job losses and economic losses in a few sectors. 'Economists are all modelling to estimate the impact and, from what I am seeing, this will shave about 0.7% off economic growth. Just not nice,' he said. In 2023, South African exports to the US accounted for around 2.2% of gross domestic product, while around 426,000 of jobs are linked to exports to the US. On the back of both the US Federal Reserve and the South African Reserve Bank announcements on interest rates this week, TreasuryONE expects the rand to remain vulnerable to dollar moves. 'However, a break above the R18.00 is likely to attract exporter inflows,' he said. Bishop also noted that the local currency had weakened on a likely interest rate cut in this week. IOL
Reuters
21-07-2025
- Business
- Reuters
South African rand flat with inflation the week's main focus
JOHANNESBURG, July 21 (Reuters) - The South African rand held steady in early trade on Monday, with the main focus this week on inflation data that will influence the central bank's thinking on interest rates. At 0740 GMT the rand traded at 17.7075 against the dollar , unchanged from Friday's close. Statistics South Africa will release June inflation data on Wednesday, with analysts polled by Reuters expecting a modest rise to 3% year on year from 2.8% in May (ZACPIY=ECI), opens new tab. "A softer print could open the door for one last rate cut this year, while a firmer number would push that possibility further out," said Andre Cilliers, currency strategist at TreasuryONE. The South African Reserve Bank's next interest rate announcement is on July 31. The bank cut its repo rate by 25 basis points at its last meeting in May (ZAREPO=ECI), opens new tab, with inflation below its 3%-6% target range. The Johannesburg Stock Exchange's Top-40 index (.JTOPI), opens new tab was up about 0.4% in early trade. The benchmark 2035 government bond was little changed in early deals, with the yield at 9.935%.
IOL News
14-07-2025
- Business
- IOL News
How US dollar strength impacts the South African rand amid trade deal uncertainty
President Cyril Ramaphosa shakes hands with his US counterpart Donald Trump during a visit to the White House in Washington DC earlier this year. Image: AFP The rand remains persistently weak against the US currency as time starts running out for South Africa to sign a trade deal amidst stronger economic indicators in the States. Having hit R17.90 on Friday, threatening to breach a key R18 mark, the local currency lost another 5c against the greenback as of 7am on Monday before recovering somewhat in early morning trade to R17.87. Weighing on the currency are several factors, including the fact that South Africa has yet to sign a trade deal with the Trump administration. While some other countries have been given a respite for the August 1 deadline when new export taxes come into effect, this does not extend to those that received official letters, including South Africa. As of the beginning of next month, South Africa will face a 30% duty on all exports to the US, which accounts for some 7.7% of outbound trade to that country and could affect gross domestic product (GDP) by around 1.3%. Euromonitor International's Trump Total Agenda scenario indicates that, in the event of a 30% US import tariff, real GDP growth could drop to 1% next year, down from a baseline forecast of 1.4%. Andre Cilliers, currency strategist at TreasuryONE, noted that the dollar has continued to firm against other developed market currencies, such as the euro and pound. Dollar remains firm in wake of inflation data and trade uncertainty Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ 'In the wake of trade uncertainty regarding tariffs and inflation data out later this week, the dollar's safe-haven status has re-emerged and benefited the greenback. What this has meant for the rand and other emerging markets is some backward trading, with the rand hovering below the R18.00 handle,' said Cilliers in a note. Cilliers added that the rand continues to trade as one of the weaker emerging market (EM) currencies over the past week, with the local currency seemingly driven by some EM sell-off in the short term. Investec chief economist, Annabel Bishop, noted that 'the rand has weakened as the US dollar recovered on the improved outlook for the US economy'. She added that South Africa is at risk of not being able to negotiate the reciprocal tariffs from the US lower as the US focuses heavily on foreign, and not only trade, policy. On Friday, Cilliers had indicated that the rand saw some late Friday movement with the local currency breaking into the R17.90s. 'The direct cause remains difficult to pin-point, but some of the factors could be Cyril Ramaphosa scheduled to speak on Sunday regarding tariffs and other local concerns,' he added. IOL could not find any mention of Ramaphosa addressing the nation on Sunday regarding tariffs. He did, however, respond to serious allegations linking Police Minister Senzo Mchunu to criminal activities over the weekend. IOL
IOL News
09-07-2025
- Business
- IOL News
Cautious sentiment sets in as dollar firms and rand edges weaker on tariff fears
A cautious tone is taking hold in global markets as investors digest renewed US trade threats, with the dollar gaining ground and the rand edging weaker. The shift follows US President Donald Trump's announcement of steep new tariffs, which has added to uncertainty and pushed some investors toward safer assets. 'After President Trump announced a new round of tariffs [Monday] evening, we have seen risk-sentiment starting to wane as the market is trying to take stock of what this could mean,' said Wichard Cilliers, Director and Head of Market Risk at TreasuryONE, on Tuesday evening. He noted that this change in sentiment had already affected emerging market currencies, with the rand 'presently flirting with the R17.90 level… ending the South African session on R17.86'. As of 1pm, the local currency was trading at R17.82 to the dollar. Bianca Botes, Director at Citadel Global, noted that the dollar had strengthened in response to the developments. 'The dollar remained firm, near a two-and-a-half-week high, following yesterday's rally, as global markets absorbed a fresh wave of US trade threats,' she said. This includes Trump's announcement of a 50% tariff on copper, which sent US copper futures more than 10% higher to a record level.
IOL News
07-07-2025
- Business
- IOL News
Rand weaker on Trump's BRICS tariff threat
Trump warned that nations aligning with BRICS or adopting anti-American policies would face an extra 10% duty. The rand weakened on Monday as markets digested renewed geopolitical risk sparked by US President Donald Trump's latest move to target BRICS-aligned countries with additional tariffs. Trump extended the deadline for new trade tariffs to August 1 and warned that nations aligning with BRICS or adopting anti-American policies would face an extra 10% duty. The fresh threat unsettled emerging markets and hit sentiment across global trading floors. 'Global markets opened the week on edge as President Trump reignited trade tensions ahead of the July 9 tariff deadline,' said Bianca Botes, director at Citadel Global. 'While only Britain, China, and Vietnam have struck deals, a dozen nations are expected to receive tariff letters starting today.' Currency strategist at TreasuryONE, Andre Cilliers, said the announcement put pressure on risk-sensitive currencies. 'BRICS currencies, along with EM markets, have come under pressure this morning with the rand weakening.' By mid-morning, the local unit had slipped to R17.71 to the dollar, from R17.50 last week Thursday. South Africa's political alignment is also in the spotlight. 'South Africa-US relations remained strained with the introduction of the US-South Africa Bilateral Relations Review Act in Congress,' Cilliers noted. The legislation is set to examine South Africa's foreign relations, particularly with China and Russia, as well as alleged human rights violations, he said.
