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The South African rand slipped in early trading on Tuesday as investors remained focused on the upcoming monetary policy decision and the ongoing tariff negotiations with the United States, which has proposed a 30% levy on South African exports.
As of 07:33 GMT, the rand was trading at 17.9725 to the dollar, marking a decline of about 0.6% from its closing level on Monday.
In a research note, ETM Analytics stated that the rand, being a risk-sensitive currency, is likely to stay under pressure. The firm noted that uncertainty persists due to the lack of progress reports on trade negotiations with the U.S., even as the August 1 deadline draws near.
“It may be that the announcement is only made on Friday, which may help clarify SA’s trade position with the U.S., but in the lead-up to that, there is some concern that SA’s negotiators have not made much progress and will have to accept whatever the U.S. puts on the table,” said the note.
South Africa’s central bank is set to announce its interest rate decision on Thursday, with economists surveyed by Reuters anticipating another 25-basis-point cut.
According to earlier data released by the central bank, M3 money supply grew by 7.27% in June, rising from 6.86% recorded in May. Meanwhile, credit growth remained steady at 4.98% for the second consecutive month.
“Credit growth is starting to pick up, reflecting the impact of lower interest rates and some improvement in household finances due to rising income and lower inflation,” said Nedbank economists.
South Africa’s benchmark 2035 government bond weakened in early trading, with the yield increasing by 2.5 basis points to 9.825%.
