Rand Hits 2023 High amidst Strain Trade Relation with US
The South African rand appreciated to around 17.1 per dollar, reaching the highest level since 2023 amidst strained trade relations with the US. The rand appreciation has been fuelled by rising prices of key precious metals, particularly gold, platinum and palladium.
The ZAR trades strong as dollar index experienced broad selloff after the US Federal Reserve’s cut rate by 25 basis points on Wednesday. Optimism over the outcome of Thursday’s meeting between President Trump and Chinese President Xi Jinping also provided support.
Fitch Solutions analysts expect South Africa will be able to negotiate a deal to lower US-imposed tariffs, it is unlikely to happen before 2026 unless significant (and likely politically unpopular) concessions are made.
In a webinar, Fitch Solutions said US–South Africa relations are likely to remain strained, elevating the risk of US sanctions and, by extension, increasing operational frictions for firms active in South Africa.
“South Africa’s efforts to deepen ties with the European Union, Mainland China, and other key partners will offer only partial relief from the adverse effects of deteriorating relations with the US.
“While we expect South Africa will be able to negotiate a deal to lower US imposed tariffs, it is unlikely to happen before 2026 unless significant (and likely politically unpopular) concessions are made”.
US negotiating positions have sought changes to South Africa’s domestic policy framework, regarding areas such as Broad-Based Black Economic Empowerment regulations and land expropriation rules – conditions Pretoria has consistently resisted.
While AGOA’s lapse raises South Africa’s effective tariff rate from 13.1% to 14.3% with the reapplication of Most Favoured Nation (MFN) tariffs, the MFN rate remains negligible relative to the “liberation day” tariff benchmark.
Fitch Solutions analysts said Pretoria is likely to continue prioritising bilateral tariff negotiations.ReplyForward. #Rand Hits 2023 High amidst Strain Trade Relation with US#
