On March 4, 2023, the South African rand weakened to 18.64 against the U.S. dollar due to upcoming GDP figures and concerns over Trump’s tariffs. Predictions for GDP growth stand at 0.9%, but budgetary uncertainties remain. The Johannesburg Stock Exchange experienced a decline of 0.7% in its Top-40 index, while government bond yields remain steady.
The South African rand opened weaker on March 4, 2023, as market participants anticipated the release of local gross domestic product (GDP) data and assessed the ramifications of U.S. President Donald Trump’s tariffs. At 0715 GMT, the rand was valued at 18.64 against the U.S. dollar, reflecting a decline of approximately 0.3% compared to its previous close. Meanwhile, the dollar experienced a modest decline against a basket of currencies.
President Trump announced that a 25% tariff on imports from Canada and Mexico would take effect on the same day, with reciprocal tariffs to commence on April 2. Investors focused on domestic issues are expecting the fourth quarter GDP figures to be released at 0930 GMT, seeking insights into the status of South Africa’s economy, the most industrialized in Africa. Reuters polls predict a GDP growth of 0.9%.
Currency strategist Andre Cilliers at TreasuryONE noted, “A stronger (GDP) print could support ZAR (the rand), but budget concerns remain a risk factor,” referencing the ongoing uncertainty regarding the national budget, which the ruling coalition failed to finalize last month.
On the Johannesburg Stock Exchange, the Top-40 index was down by about 0.7%. The yield on South Africa’s benchmark 2030 government bond remained stable, recorded at 9.085% during early transactions.
In summary, the South African rand has weakened in anticipation of local GDP data and in response to impending U.S. tariffs. With forecasts suggesting modest GDP growth, investors remain cautious due to unresolved budget issues within the government. The equity market similarly showed signs of decline, reflecting broader economic uncertainties as stakeholders await more definitive economic indicators.
Original Source: www.cnbcafrica.com
