The South African rand fell after President Trump announced a cessation of federal funds to South Africa and cited safety concerns for farmers, while the dollar declined owing to poorer job growth data. The rand had previously gained nearly 3% against the dollar before this downturn, which reflects ongoing volatility influenced by global economic factors and Trump’s policies.
The South African rand declined on Friday following U.S. President Donald Trump’s announcement of a complete halt to federal funding to South Africa. Concurrently, the dollar weakened after the U.S. reported lower-than-anticipated job creation figures for the previous month. At 1519 GMT, the rand was valued at 18.21 against the U.S. dollar, marking a 0.3% decrease from its previous close, having dropped about 1% earlier that day. This downturn ended a four-day streak of gains, though the rand had appreciated nearly 3% overall since the prior Friday due to market responses to Trump’s tariff policies.
The dollar traded approximately 0.5% lower against a basket of currencies, influenced by disappointing job growth data for February, which increased speculation regarding potential interest rate cuts by the Federal Reserve this year. In a post on Truth Social, Trump stated that all federal funding to South Africa would cease and that American farmers concerned about safety in South Africa would be offered expedited citizenship paths in the U.S. “This negative sentiment surrounding South Africa and Trump’s rhetoric continued to weigh on the rand,” remarked Wichard Cilliers, the head of market risk at TreasuryONE.
Trump’s remarks likely referenced allegations regarding South Africa’s land redistribution policies and accusations of injustices against specific demographics. Furthermore, last month, his administration issued an executive order to terminate U.S. financial aid to South Africa, citing its land policy and a legal case against Israel at the International Court of Justice as drivers of discontent. The rand, being sensitive to risk, tends to react to both global economic conditions and domestic developments.
According to the central bank, South Africa’s net foreign reserves increased to $61.733 billion at the end of February, up from $61.328 billion in January. On the Johannesburg Stock Exchange, the Top-40 index closed approximately 0.3% higher. Meanwhile, the yield on South Africa’s benchmark 2030 government bond remained stable at 9.07%.
In summary, the South African rand weakened following President Trump’s announcement to cut federal funding, influenced by pervasive negative sentiment and economic data from the U.S. Despite recent gains, the rand exhibited volatility under pressure from geopolitical tensions and local economic indicators. The increase in net foreign reserves indicates some resilience in South Africa’s economy, although global factors continue to heavily impact the rand’s performance.
Original Source: www.tradingview.com
