Rand ignores Trump tariffs

Published: 3 hours ago

The rand continued to gain on Friday morning, shrugging off the impact of US trade tariffs that came into effect at midnight.

The taxes, threatened by US President Donald Trump and amended several times, left the currency marginally stronger – up 0.05% from the same time on Wednesday – despite ongoing trade discussions between President Cyril Ramaphosa and Trump.

Presidency spokesperson Vincent Magwenya said the leaders had agreed to “continue with further engagements recognising the various trade negotiations the US is currently involved in”. He added that “respective trade negotiating teams will take forward more detailed discussions,” as efforts continue to resolve longstanding trade imbalances.

Minister of Trade, Industry, and Competition Parks Tau confirmed that no final trade agreement has yet been reached. The tariffs follow a formal letter from Trump demanding South Africa address market access restrictions and trade imbalances.

Concerns that the tariffs would further damage an already struggling economy have so far not played out in the currency market. Analysts say the rand is being supported by global factors rather than hit by the duties. unlike earlier this month when it weakened on expectations of an August 1 tariff start date.

The JSE's All Share Index (ALSI) has also been buoyant, again breaching 100 000 points to a new record, holding near a record on Friday at mid-morning.

Andre Cilliers, currency strategist at TreasuryONE, has said the dollar remains under pressure against major currencies as expectations of US interest rate cuts grow. Federal Governors Mary Daly and Neel Kashkari have both called for immediate cuts in response to weak labour market data, shifting sentiment.

Nolan Wapenaar, co-chief investment officer at Anchor Capital, previously indicated markets are now pricing in the possibility of up to three Federal Reserve cuts in 2025. He added that China's July exports rose 7.2% year-on-year, boosting emerging market currencies, including the rand, despite South Africa's failure to secure a tariff-avoidance deal.

Gold prices have also risen, supported by safe-haven demand following the tariff announcements and rate cut expectations. Traders are pricing in a 95% chance of a 25 basis point Fed cut next month.

Commodity strength has lifted local equities. Peter Little, fund manager at Anchor Capital, said on Thursday that the ALSI is up 22% year-to-date, with gains concentrated in precious metal miners, Naspers and Prosus, and telecommunications stocks. These three sectors make up a third of the index's market cap but account for about 95% of its total gains this year.
- iol

Tags: Trump,