JOHANNESBURG: South Africa’s rand firmed on Thursday, as markets awaited clarity on U.S. tariffs and local investors looked for news on the future of the coalition government due to a lingering budget stand-off.
At 1355 GMT, the rand traded at 18.775 against the U.S. dollar, about 0.3% stronger than its previous close.
U.S. President Donald Trump met Japanese officials on Wednesday, in one of the first rounds of face-to-face talks since his sweeping tariffs roiled global markets and stoked recession fears.
Markets were also processing comments by Federal Reserve Chair Jerome Powell, who warned of the risk of slowing growth and rising prices due to tariffs.
Like other risk-sensitive currencies, the rand takes direction from global drivers such as U.S. economic policy in addition to domestic factors.
Local investors continue to track developments around a budget stand-off between the two biggest parties in the coalition government, the African National Congress (ANC) and the Democratic Alliance (DA), over a proposed value-added tax hike on May 1.
South African rand gains as dollar slumps on tariff uncertainty
The pro-business DA voted against the budget’s fiscal framework in parliament and is challenging the planned VAT hike in court.
“(South Africa’s) domestic political developments are not taking place in isolation. On the contrary, if left unresolved, they may compound an already uncertain international environment,” ETM Analytics said in a research note.
On the stock market, the Top-40 index was little changed.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 2 basis points to 9.16%.
American Dollar Exchange Rate