Rand recovers after taking a beating in wake of Trump victory
After sliding when Donald
Trump was surging back to power in the US, the rand recovered the losses on
Thursday.
As the Republican candidate racked up the electoral votes, the South African currency tumbled nearly three per cent to 17.80 to the dollar on Wednesday morning after closing at 17.45 on Tuesday evening.
"The two main reasons, firstly, the dollar strengthened enormously against most currencies on expectations that would be an increase in import tariff on all goods around the world by the Trump administration, that would result in increased inflation and compel interest rate to be higher than otherwise would have been case US interest rate,” said Chief Economist at Econometrix, Azar Jammine.
By Thursday midday, it had rallied back to around 17.40 to the greenback.
Jammine said, however, that there is another fear that the AGOA trade agreement may end if the Trump administration gets annoyed with South Africa's international relations policies.
READ: Trump win will renew focus on South Africa-US relations, says election analyst
AGOA allows this country and other sub-Saharan nations to export various products to the US duty-free.
"South Africa cosying up with Palestinians and against Israel and especially having taken Israel to the International Court of Justice, would be against America. Secondly, South Africa has been cosying up with Russia relative to Ukraine, which obviously does not go down well with Americans.
"So, there has been a fear that the Trump administration, given his previous attitude towards Africa, would take a harder line in terms of continuing the close relations between South Africa and the United States.”
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