Rand Slides Amid Political Uncertainty
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The rand has taken a hard knock as tensions grow within South Africa’s Government of National Unity (GNU), particularly between the ANC and DA. Financial markets are nervous, and the threat of the DA exiting the GNU is a big reason why the rand has weakened to over R19.40/USD, making it the worst performer among emerging market currencies right now.
💰 Why Is This Happening?
Political infighting around VAT increases and budget spending has sparked a deeper disagreement over who should be part of the GNU.
Without this internal instability, the rand would likely be trading below R18.00/USD—thanks to a weaker US dollar and global market factors.
If the DA does leave the GNU, the rand could weaken beyond R20.00/USD, and possibly reach R22.00/USD, depending on who the ANC partners with next.
📉 What Does This Mean for Your Clients?
A weaker rand pushes up fuel prices, which will increase transport, food, and input costs across most industries.
Expect higher import costs, especially for clients reliant on foreign supplies, stock, or equipment.
The cost of living and business operating expenses will likely rise—adding pressure to households and small businesses.
📌 Plan Smart to Soften the Blow
Now is a good time to help your clients prepare for currency volatility:
Encourage businesses to review budgets, cash flow forecasts, and pricing strategies.
For importers, consider hedging or forward contracts to manage forex risk.
Keep a close eye on fuel levy adjustments, as this may affect VAT and pricing structures.
The political climate may be out of our hands—but smart planning can help soften the financial blow. Stay informed, stay prepared.
Source: The Investec View
