Uncertainty around South Africa’s Government of National Unity and US tariffs blamed as rand plummets to near R20 against the dollar
Rand Hits Record Low: The South African rand took a nosedive on Wednesday, 10 April 2025, plunging to a record low of R19.93 against the US dollar—the worst performance since May 2023 when it briefly touched R19.77.
Fuelled by fears of a possible collapse of the Government of National Unity (GNU) and rising global trade tensions due to former US President Donald Trump’s threatened import tariffs, the local currency has endured a volatile and turbulent week.
On Tuesday evening, the rand had already weakened to R19.74/USD, but by Wednesday night it had broken past that, briefly hitting the psychological barrier of R19.93/USD before slightly strengthening to R19.47/USD following news of Trump delaying his tariffs by 90 days.
Global Tensions & Local Instability: A Double Blow
Economists say both international and domestic issues are to blame.
Maarten Ackerman, Citadel’s chief economist, explained that while Trump’s tariffs triggered global risk aversion, local political instability played a bigger role, especially doubts around whether the GNU can survive.
FNB’s Koketso Mano noted that instability within the GNU, coupled with trade policy uncertainty, sparked investor nervousness and resulted in heavy losses for emerging market currencies like the rand.
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Worst Emerging Market Currency Right Now
Investec‘s Annabel Bishop said the threat of the DA’s exit from the GNU has rattled the financial markets, making the rand the worst-performing emerging market currency currently.
Bishop added that if the GNU breaks up, the rand could plunge to R21/USD or even beyond R22/USD, depending on the coalition’s new partners and the market’s perception of their economic stance.
History Repeating Itself?
The last time the rand was this weak was in May 2023, when the US ambassador accused South Africa of supplying arms to Russia. Similar sell-offs occurred during the Covid-19 pandemic and South Africa’s investment grade downgrade.
In 2023, the rand reached R19.86/USD under pressure from geopolitical tensions, load shedding, and weak investor confidence—a scenario that looks strikingly familiar today.
Is the Rand Undervalued?
Despite the plunge, economists argue the rand is not fairly valued.
- Citadel pegs fair value at around R18.50/USD.
- FNB estimates R18/USD.
- Anchor Capital believes it should be closer to R16/USD.
This discrepancy suggests a market overreaction driven by sentiment rather than fundamentals.
Where to From Here?
The future of the rand hinges heavily on whether the GNU holds or falls apart.
Ackerman warns that news of an ANC pivot to new coalition partners could send the rand to R22/USD. Conversely, GNU stability and economic stimulus from China might see the currency recover below R19/USD.
Mano adds that gold prices, oil levels, and a softening dollar could ease the pressure. However, with 50% of the rand’s weakness linked directly to local politics, any hope of stability will depend on domestic cohesion.
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