The South African rand approached an all-time low against the US dollar on Wednesday, amid global market tensions over new US tariffs and rising domestic political instability.
The rand fell to 19.8225 against the dollar in early trading, nearing a record low of 19.9075 reached in June 2023. At 06:55 GMT, it had gained 0.2% on the day and rebounded slightly to 19.73, but remained down more than 3% for the week.
The South African rand, which is usually sensitive to global risk sentiment, has been hit hard by the fallout from US President Donald Trump’s latest tariff measures. New tariffs came into effect on Wednesday, affecting dozens of countries and China facing tariffs of up to 104%.
Domestic political tensions added to the pressure. Sharp disagreements between the two major parties in South Africa’s broad coalition government over the national budget have rattled investors. The junior coalition partner not only voted against the budget in parliament but also challenged it in court.
While both parties reassured on Tuesday that they would remain committed to the Government of National Unity (GNU), fears persist that the main pro-business party, the Democratic Alliance, could pull out.
“Local developments related to the GNU have intensified the shift away from the rand,” analysts at ETM Analytics said.
South Africa’s 2030 government bond also weakened, with yields rising 13 basis points to 9.33% in early trading.