US President Donald Trump. Photo: AP
US President Donald Trump. Photo: AP

Trump tweet trounces rand

By Sizwe Dlamini Time of article published Aug 23, 2018

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CAPE TOWN - The rand was trounced by the dollar yesterday after a tweet by US President Donald Trump about South Africa’s land debate planted thoughts of possible sanctions against the country.

The currency weakened 1.7 percent after Trump said he asked Secretary of State Mike Pompeo “to closely study the South Africa land and farm seizures and expropriations”, according to Bloomberg.

TreasuryONE senior currency dealer Andre Botha said in Parliment President Cyril Ramaphosa addressed some of the issues regarding the land reform. “Key among which is that he does not support nationalisation of land and that the process of redistribution will be done in an orderly fashion, with land owned by the state and municipalities that are not used or underutilised being earmarked for the redistribution.” 

This was expected to alleviate some fears among investors and the rand to continue on its strengthen path during the session.

“Furthermore, the US Fed minutes did not indicate a desire from the Fed hike rates quicker than their forward guidance suggests. This has nibbed some of the calls for higher rates faster in the bud,” said Botha. 

At 5pm the domestic currency was widely unchanged against the US dollar at R14.29 compared with Wednesday’s same time bid. Against the pound the rand was 11c stronger at R18.34 and to the euro, the currency eased 4c to R16.54.

Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes, said President Ramaphosa’s announcment that that the first step in the land redistribution process would be for government to issue the land held by the state provided welcome relief to the market, assisting the rand to trade stronger.

“Trump also informed the world via his favourite means of communication – Twitter – that he has asked the US secretary of state to investigate the land redistribution without compensation and farm killings taking place in South Africa. 

“Somehow Trump’s involvement makes me more on edge,” said Botes.

However, JSE stocks were unpeturbed by all the Trumponomics drama withe the blue-chip Top40 index gaining 0.13 percent to 52 131.76 points, while the broader all share index inched up 0.14 percent to 58 204.72 points.

Leading gainers among major movers were Clicks, which gained 5.49 percent to R196.80 followed by Curro, which increased 4.98 percent to R33.70. South32 added 4.05 percent to R36.73, while RCL Foods was 3.8 percent higher at R17.49 and Discovery scored 3.41 percent gains to R173.

The biggest losers were Exxaro, which sank 6 percent to R147, followed by African Rainbow Minerals, which declined 4.2 percent to R123.75. Anglo American dropped 3.2 percent to R283.97, while Mediclinic fell 2.27 percent to R89.89 and Fortress Reit gave up 2.11 percent to end the day at R16.20.

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