Rand crashes past R19 to the dollar

The rand continued its downward slide on Friday (4 May), losing close to 2% and crashing past R19 to the dollar amid renewed calls from US officials for sanctions on South Africa.

US Congressman and Republican Ronny Jackson introduced the US-South Africa Bilateral Relations Review Act on Friday.

The bill would mandate a full review of the bilateral relationship between the United States and South Africa and aims to impose sanctions on “corrupt South African government officials”.

This is on the basis that they support the United States’ enemies like China, Russia and Iran.

“South Africa has brazenly abandoned its relationship with the United States to align with China, Russia, Iran, and terrorist organizations, a betrayal that demands serious consequences,” Jackson said.

“This legislation ensures we conduct a comprehensive review of this supposed ‘ally’ while also holding accountable any corrupt officials.”

The bill specifically targets South African government officials and ANC leaders to be eligible for the imposition of sanctions.

“The era of governments undermining American interests without repercussions ends now.”

The crash has been exacerbated by ructions between the DA and ANC in the Government of National Unity (GNU) and new tariffs introduced by US president Donald Trump.

By 11h00 on Friday, the rand was trading at R19.11 to the dollar (-1.97%), R21.02 to the euro (-1.59%) and R24.82 to the pound (-1.26%).

The rand has been under constant pressure over the past few weeks as tension built around passing the 2025 budget in parliament.

The budget, which includes a one-percentage-point hike in VAT over the next two years and no adjustments to tax brackets, was passed by a narrow majority on Wednesday (2 April).

Critically, however, this was done without the backing of the full Government of National Unity (GNU), showing a possible ‘point of no return’ rift in the coalition.

The second-biggest party in the GNU, the Democratic Alliance, vehemently opposed the budget tax hikes and voted against them in parliament.

The lead party in the GNU, the ANC, sidestepped its partner by shopping for support outside the coalition, ultimately succeeding.

Given the way the saga played out, economists and analysts are now doubtful that the GNU as it exists can continue, with the DA mulling its next move and possible exit from the grouping.

Even as the rift in the GNU was laid bare, later on Wednesday, US president Donald Trump announced a new 10% global tariff on imports.

A long list of countries with significant trade imbalances with the US—including South Africa—were hit with even higher tariffs.

A 30% tariff was imposed on South Africa, expected to come into effect from 9 April.

While many key South African exports are exempt, the tariffs will have a significant impact on the agriculture and automotive sector in particular.

These sectors are also likely to suffer from further action from the United States, such as the potential—and likely—end of the African Growth and Opportunity Act (AGOA).