The local currency could come under further pressure on Wednesday as parliament looks set to vote on budget legislation, which has the potential to end the GNU. (Yuichiro Chino/ Getty Images)
The rand slumped to its weakest level since January after Parliament voted to pass a key piece of budget legislation – which may mean the end of the business-friendly government of national unity (GNU).
On Wednesday evening, 194 MPs voted in favour of the Fiscal Framework, and 182 against. The ANC’s main governing partner, the DA, voted against it. President Cyril Ramaphosa and Finance Minister Enoch Godongwana both said the party should leave the GNU if the DA does not support the Budget.
The ANC refused to comply with the DA’s demands for a larger say in economic decision making.
The local currency slumped to R18.80/$ shortly after the vote. Bloomberg reported that this was its weakest level on a closing basis since 16 January. A few days ago, the rand was trading below R18.14. It lost 2% of its value just over the past day.
Uncertainty about new global import tariffs, which will be announced by the US government later on Wednesday, also added pressure on the currency.
The dollar was firmer as investors sought a safe haven investment ahead of US President Donald Trump’s announcements of new global reciprocal tariffs. The US is SA’s second-largest trade partner.
Trump has claimed 2 April as “Liberation Day” for US trade. A White House spokeswoman previously said that the reciprocal tariffs on countries that impose duties on US goods would take effect immediately after Trump’s announcement, Reuters reported.
Concerns about whether Trump’s new tariffs will stoke US inflation and trigger a recession in that country have weighed on the dollar, which fell more than 3% against a basket of currencies last month.
Discover the Truth
Step into a world where the truth shines bright, and every headline is worth your time. With News24, you’re not just reading the news; you are part of a community that values knowledge and insight. Immerse yourself in compelling stories, sharp analyses, and content that keeps you ahead of the curve.
