South African Rand Weakens Prior to GDP Data amid U.S. Tariff Concerns

The South African rand fell against the U.S. dollar ahead of GDP data release, trading at 18.64. Investors are concerned about President Trump’s upcoming tariffs on Canada and Mexico. Domestic GDP figures, expected to indicate 0.9% growth, may influence the rand’s performance, though budgetary uncertainties remain risk factors.

On March 4, the South African rand depreciated against the U.S. dollar as investors awaited local GDP data amidst ongoing concerns regarding U.S. tariffs imposed by President Donald Trump. By 0715 GMT, the rand was trading at 18.64 per dollar, reflecting a 0.3% decline from its previous closing value. Concurrently, the U.S. dollar experienced slight weakening against a range of other currencies.

President Trump announced on Monday that 25% tariffs on imports from Canada and Mexico would take effect on Tuesday, with additional reciprocal tariffs commencing on April 2. This news has escalated concerns among investors about the broader economic impact of such measures.

Domestically, market participants are focused on the forthcoming fourth quarter GDP figures, scheduled for release at 0930 GMT. Economists surveyed by Reuters predict a modest growth of 0.9%, which could potentially bolster the rand if the data exceeds expectations. However, currency strategist Andre Cilliers from TreasuryONE cautioned that “budget concerns remain a risk factor,” referencing the delays imposed by the ruling coalition’s lack of consensus on the national budget.

On the Johannesburg Stock Exchange, the Top-40 index recorded a decrease of approximately 0.7%. Meanwhile, South Africa’s benchmark government bond for 2030 remained stable, with a yield of 9.085% observed during early trading activities.

In summary, the South African rand weakened ahead of critical GDP data and in the shadow of looming U.S. tariffs. With predictions of a slight economic expansion, investor focus centers on whether the data will positively influence the rand. Nonetheless, underlying budgetary concerns pose significant risks to the currency’s stability, as highlighted by financial analysts.

Original Source: www.cnbcafrica.com