Cape Town – The rand strengthened on Monday, gaining about 0.4% against the dollar despite escalating tensions between the US and South Africa following the expulsion of South Africa’s ambassador.
The dollar weakened ahead of the Federal Reserve’s interest rate decision.
“At 08:14 GMT, the rand traded at 18.0175 against the dollar, about 0.4% stronger than its previous close,” Reuters reported.
Gold surged to a record high of $3,018.66 as investors sought safe-haven assets amid trade tensions fueled by US President Donald Trump’s tariff policies, the report said.
US-South Africa relations have worsened since Trump’s return to the presidency, with Ambassador Ebrahim Rasool expelled after calling Trump a leader of a white supremacist movement. While South Africa expressed regret over the move, it remains committed to maintaining bilateral ties.
Economic growth
Despite the diplomatic strain, analysts believe trade relations will hold due to South Africa’s supply of key minerals to the US and the benefits of the African Growth and Opportunity Act (AGOA).
Meanwhile, local economic attention shifts to upcoming inflation data and an interest rate decision. The Johannesburg Stock Exchange’s Top-40 index rose 0.7%, while government bonds saw slight gains.
According to Daily Invest, Standard Bank projects the rand to end 2025 at R17.75/USD in its base case, with a bear scenario at R19.32/USD and a bull case at R16.54/USD.
The bank expects the rand to strengthen due to improved economic growth and healthier government finances, driven by political stability under the Government of National Unity (GNU).
These projections were revealed in the bank’s annual financial results for the year ended 31 December 2024, where its Africa Regions portfolio took a hit from a stronger rand in the second half of the year.
Follow African Insider on Facebook, Twitter and Instagram
Picture: Pixabay
For more African news, visit Africaninsider.com
Compiled by Betha Madhomu
