The South African rand weakened in early trading on Wednesday as political tensions over the country’s contested budget persisted, while investors awaited details of U.S. President Donald Trump’s tariff plans.
By 07:30 GMT, the rand traded at 18.57 per dollar, down about 0.3% from its previous close. Analysts attributed the decline primarily to uncertainty surrounding budget negotiations.
On Tuesday, the budget cleared its first hurdle in parliament after the ruling coalition’s largest party secured enough support, despite concerns over some key revenue measures. However, the African National Congress (ANC) had to rely on a small party outside the coalition to pass the fiscal framework, angering its main partner, the Democratic Alliance (DA). The DA accused the ANC of crossing a “line in the sand.”
Meanwhile, an opposition party has petitioned the Speaker of Parliament to overturn Tuesday’s proceedings and prevent lawmakers from voting on the next stage of the budget process on Wednesday.
ETM Analytics noted that “the rand’s weakness was mainly attributable to the fractious budget negotiations,” reflecting broader investor uncertainty.
Adding to market jitters, the U.S. dollar edged higher as traders braced for Trump’s long-anticipated reciprocal tariffs on countries that impose duties on U.S. goods.
South Africa’s benchmark 2030 government bond also weakened in early trade, with the yield rising 9.5 basis points to 9.2%.
