South African Rand Weakens Ahead of GDP Data Amid Trump Tariffs

The South African rand weakened early on Tuesday as market participants awaited local GDP data and responded to new tariffs imposed by the United States. The rand traded at 18.64 to the dollar, reflecting a 0.3% decrease. Investors are keenly anticipating GDP figures that are expected to indicate a growth of 0.9%.

Early on Tuesday, the South African rand experienced a decline as investors awaited the release of local gross domestic product (GDP) data and focused on the implications of U.S. President Donald Trump’s tariffs. At 0715 GMT, the rand was trading at 18.64 against the U.S. dollar, reflecting a decrease of approximately 0.3% from its previous close. In contrast, the dollar exhibited slight weakness against a variety of other currencies.

President Trump announced on Monday the implementation of 25% tariffs on imports from Canada and Mexico, effective immediately, with reciprocal tariffs scheduled to commence on April 2. Investors concentrated on domestic economic indicators in anticipation of the fourth quarter GDP figures set to be released at 0930 GMT, which could offer insights into the performance of South Africa’s most industrialized economy.

Economists surveyed by Reuters anticipate a GDP growth rate of 0.9%. “A stronger (GDP) print could support ZAR (the rand), but budget concerns remain a risk factor,” noted Andre Cilliers, a currency strategist at TreasuryONE. He referred to the challenges faced by the ruling coalition regarding the national budget, which resulted in its postponement last month.

The Johannesburg Stock Exchange recorded a decline in the blue-chip Top-40 index, which was down by approximately 0.7%. Meanwhile, South Africa’s benchmark 2030 government bond saw little movement in early transactions, with a yield of 9.085%.

In summary, the South African rand has weakened ahead of crucial GDP data and in light of impending U.S. tariffs. The market is responding to both domestic financial conditions and international trade policies. The upcoming GDP figures are critical for assessing the health of South Africa’s economy amidst ongoing fiscal challenges, including budgetary uncertainties.

Original Source: www.cnbcafrica.com