Rand tanks as Trump poised to return to White House

Republican presidential nominee, former President Donald Trump dances off stage at the conclusion of a campaign rally at the J.S. Dorton Arena on November 04, 2024 in Raleigh, North Carolina. With one day left before the general election, Trump is campaigning for re-election in the battleground states of North Carolina, Pennsylvania and Michigan. (Photo by Chip Somodevilla/Getty Images)

The rand was on the ropes on Wednesday morning as America turned blood-red.

After starting the day at R17.40 to the dollar, the currency slid in Asian trade to hit R17.81, a loss of about 3%, as emerging markets across the board sank on the rising prospects of Donald Trump returning to the White House. 

This signals that “risk aversion” among global investors is going through the roof. Uncertainty, heightened geopolitical risks and a looming wall of US tariffs are all bad news for the global economy, especially emerging markets.

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The yield on the benchmark 10-year South African government spiked over 30 basis points on Wednesday morning to 9.66%, a further reflection of souring investor sentiment.

This is the first indication of what impact a second Trump presidency will have on the South African economy, and it bodes ill. 

The fate of the African Growth and Opportunity Act (Agoa) is also now uncertain and with it at least 13,000 South African jobs which depend on duty-free access to the US market.

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But Trump’s tariff plans – which most economists dismiss as ill-conceived or downright bonkers – would also hurt South African exports more widely to the US as well as worldwide because of the ripple effects on the global economy and trade. DM