April 07, 2025
MyCURRENCY News | Week 14 2025
What we know
As the Rand slowly traded stronger against the Dollar over the course of a few months, we tend to forget that South Africa is rarely the one driving the movement. We were reminded of this last week when Trump imposed tariffs on this country, as well as countless others, while our beloved new GNU government seems to be on the verge of a fallout.
The impact of Trump’s tariffs on South Africa was a 30% import tax on any goods from our shores. This was based on a claim that there is a 60% tariff on US goods entering the country. The South African government has stated that they wish to understand how this figure was reached before engaging the US with reciprocal tariffs.
In the midst of this global trade war, where it seems that not even uninhabited Arctic islands can escape Trump’s wrath, our GNU is navigating rocky shores. As the DA teeters between leaving and staying, the Rand continues to lose ground day after day. With markets already taking a knock following last week’s news, a decision by the DA to leave the GNU will likely further erode investor confidence.
Looking at economic data releases, last week’s employment figures from the US did not help the struggling Rand. The Dollar was able to find some (relative) strength on the back of a stronger-than-expected employment figure, with 228,000 new jobs added to the payroll. Even with a weak Dollar, the Rand has lost 6% against the Dollar and the Pound, and just over 8% against the Euro since the start of the month.
What others say
The Guardian – ‘Nowhere on Earth is safe’: Trump imposes tariffs on uninhabited islands near Antarctica
“Australian prime minister surprised after external territories – including tiny Norfolk Island and remote islands home to penguins – targeted by US president.”
BBC – Zimbabwe to scrap tariffs on US goods as it faces 18% Trump levy
“Zimbabwe’s President Emmerson Mnangagwa has announced he will suspend tariffs on goods imported from the US in an attempt to build a “positive relationship” with President Donald Trump’s administration.”
Moneyweb – Traders are betting on five more Fed cuts on recession fears
“The rapid repricing reflects the fear sweeping global markets, with US President Donald Trump showing little appetite to back down on aggressive trade tariffs announced last week.”
What we think
Last week we said “A shift to risk-off sentiment could prompt investors to seek refuge in hard currencies. The hope is that the GNU will reach an agreement on the budget by Wednesday, when the parliamentary vote takes place, which could help stabilise the Rand.”
As we saw, ongoing disagreement regarding the budget has led to significant risk-off sentiment, which will only worsen should the projected worst-case scenario play out: a GNU without the DA.
Locally, we look forward to the release of the Business Confidence Index (or lack thereof). The US is set to release inflation data on Thursday, which will provide insight into how well they are keeping inflation under control. Although no rate cuts are currently expected, a higher figure could delay any potential cuts further into the future – despite Trump’s insistence that the Fed should be cutting immediately.
As we await the DA’s final decision regarding their position in the GNU, we foresee two potential trading ranges for this week:
- Favourable outcome: 18.80 – 19.20
- Unfavourable outcome: 19.20 – 19.60
Things could shift quickly, but for now, these are the ranges we’re working with.
Have a great week ahead.