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The South African rand slipped in value on Monday, as investor sentiment remained cautious despite a positive surprise in domestic manufacturing data. The local currency’s weakness was largely driven by persistent trade concerns, particularly regarding steep tariffs imposed by the United States on South African exports.
As of 12:35 GMT, the rand was trading at 17.7825 against the US dollar, reflecting a 0.2% decline from its closing value on Friday. South Africa is currently grappling with efforts to secure more favourable trade terms with the United States. Currently, US imports from South Africa are subject to a 30% tariff — the highest among all sub-Saharan African nations. In a move to address this imbalance, President Cyril Ramaphosa’s office reported last week that he had held discussions with former US President Donald Trump, and that both nations had agreed to initiate more detailed negotiations through their respective trade teams.
On the economic front, South Africa’s manufacturing output provided a glimmer of good news. Data released on Monday by Statistics South Africa showed that factory production grew by 1.9% in June compared to the same month last year. This was significantly better than the upwardly revised 0.7% growth recorded in May and exceeded analysts’ expectations. Economists polled by Reuters had forecast a 1% increase, while Nedbank anticipated 0.8%.
Despite this manufacturing uptick, broader concerns about the country’s trade positioning and global economic conditions kept financial markets on edge. Investors are now awaiting a series of key data releases this week, including mining output and unemployment statistics on Tuesday, followed by retail sales figures on Wednesday.
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In equity markets, the Johannesburg Stock Exchange’s Top-40 index dropped by 0.5%, reflecting subdued investor confidence. Meanwhile, government bonds also took a hit, with the yield on South Africa’s benchmark 2035 bond climbing two basis points to 9.65%, indicating a slight dip in demand. Overall, while domestic economic indicators showed modest strength, external trade pressures and global uncertainty continued to weigh heavily on South Africa’s currency and financial markets.
