Rand, stocks, government bonds slump

The rand, stocks and government bonds slumped on Monday following United States (US) President Donald Trump’s comment on how he would cut off funding for South Africa.

This morning, the rand traded at R18.89 against the US dollar, about 1% weaker than its closing level on Friday.

On Sunday, Trump said, “certain classes of people” in South Africa were being treated “very badly” and he would suspend aid until the matter was investigated.

Trump said South Africa was confiscating land. This is after President Cyril Ramaphosa signed into law, legislation that allows the state to expropriate land in the public interest under certain circumstances.

Over the weekend, Trump imposed sweeping tariffs on Canada, Mexico and China, sending global currencies to multi-year lows.

The rand was trading at R18.92 to the dollar at midday.

Presidential Spokesperson, Vincent Magwenya says South Africa will never engage deliberately on trade war with a trading partner:

However, market analysts say it is still not clear if the recent weakness in the rand has anything to do with Trump’s remarks on South Africa.

Rand Swiss Portfolio Manager, Gary Booysen, expects uncertainty to dominate local and global markets. The local unit has also been impacted by a strong US dollar.

“It’s difficult to unpack whether the currency weakness is coming specifically from the tweet or from the general risk of mood that we’re seeing following the implementation of Trump to halt funding. The President has already responded to this and, you know, just reminded everyone that South Africa is a constitutional democracy, that the government hasn’t confiscated land, that this is a very valid mechanism within our constitution. So, obviously, doing what they can to alleviate some fears and we have seen the currency move off its weakest levels, you know, down from above 19,” explains Booysen.