The South African rand continued its sharp decline against major currencies on Monday morning, weighed down by global recession fears and escalating trade tensions between the United States and China. The currency weakened to R19.40 per US dollar, extending losses triggered by former U.S. President Donald Trump’s tariffs. Since March 31, the rand has depreciated 6% and lost 4.75% since Trump’s April 2 trade policy announcement. Against the euro, the rand dropped 6.4%, hitting R21.28. If this trend persists, inflationary pressures may mount — though lower international oil prices could help offset fuel price increases, IOL reported.
Global markets responded negatively to the ongoing trade war. The JSE All-Share Index fell 1.83% on Monday after a 5.26% drop on Friday. Worldwide, stock markets saw steep losses: Japan’s Nikkei fell 8%, Hong Kong’s Hang Seng plunged 10%, and China’s Shanghai Composite lost over 4%. China retaliated by imposing 34% tariffs on U.S. goods, effective April 10, further stoking economic uncertainty. Analysts warn that collapsing global demand signals a looming recession.
According to Daily Investor, award-winning economist Dawie Roodt cautioned that South Africa is heading toward a recession amid global and domestic economic turmoil. The situation has worsened following Trump’s decision to impose a 10% global tariff on imports, a 30% tariff on South African goods, labeling the country a “worst offender,” and a 25% tariff on imported vehicles, threatening South Africa’s car manufacturing sector.
Political instability has compounded economic concerns as the Government of National Unity (GNU) faces internal tensions. The ANC relied on smaller parties to pass the 2025 Budget, causing friction with the DA, potentially fracturing the coalition. Business leaders have urged political parties to resolve their disputes, warning that a government collapse could lead to job losses and economic decline.
The economic turmoil has led to steep losses in South Africa’s financial markets: The JSE All Share Index fell from 89,951 to below 79,000, and the rand weakened from R18.27 to R19.34 per US dollar. Global investors are shifting funds to U.S. capital markets, despite a weakening dollar and falling long-term interest rates. Roodt, taken aback by the market turmoil, stressed that the global financial landscape has fundamentally changed and is unlikely to recover soon. He advised South Africans to seek practical financial guidance to weather the crisis.
On Monday morning, April 7, 2025, the rand continued to weaken against the pound, reaching R25.04 at 10:15 am, surpassing the previous peak of R24.94 observed last week. TreasuryONE’s Andre Botha explained that the rand's particular weakness against the pound was due to the combined impact of the Budget issues and Trump's tariffs.
The tariffs announced by Trump last Wednesday have led to a bloodbath on the markets, performing far worse than in March 2020 during the Covid-pandemic. The rand lost almost 6% of its value against the dollar, closing at R19.10/$ on Friday night, and further declining to R19.40 on Monday afternoon. The S&P500 Index, which includes 500 leading companies in the U.S., lost $5 trillion in market value just last week.
Prof. Bonke Dumisa, an independent economic analyst, stated that the intentional manipulation of the rand continues and is worsening, as four of the five market indicators opened significantly negative. “Those who are manipulating the value of the rand will continue doing this and milk it until there is nothing more to exploit. South Africa is under siege,” Dumisa said. He expressed skepticism about the coherence of Trump’s tariff wars, suggesting that while some believe there is a strategy, he doubts it.
In addition to the rand's decline against the dollar, it also weakened significantly against the UK Pound Sterling from R23.50/UK£ on Friday, March 28, to R24.97/UK£ by Monday morning, April 7. The rand also weakened against the Euro from R19.56/€ on Friday to R21.33/€ on Monday morning.
The only good news was that the gold price opened higher at US$3,022 compared to last Friday’s opening price of US$3,087, while Brent crude oil opened at US$63.36, down from US$68.44.
Markets are still trying to understand the long-term implications of these tariffs. Maarten Ackerman, chief economist at Citadel, noted that the turmoil in the markets last week continued with a significant sell-off in Asian markets, likely to spill over into U.S. markets later in the day. He stressed that the rand's decline was mainly due to local issues, particularly the political gridlock around the budget.
Liandra da Silva, a specialized economist at the Nedbank Group Economic Unit, stated that Trump’s tariffs have notable implications for SA/US trade and could slow exports, particularly in sectors like precious metals and transport equipment. She warned that the tariffs present adverse risks to the rand, inflation, and interest rates.
George Brown, an economist at Schroders, pointed out that Trump’s tariffs were more punitive than expected and could push U.S. inflation up by 2%, hitting growth by 0.9%. Several countries have indicated they will retaliate with countermeasures, increasing the risk of even higher tariffs to come.
As the rand continues to face pressure from both domestic and international factors, the outlook remains uncertain, with economists urging caution and proactive measures to navigate the turbulent economic landscape.
