President Ramaphosa was in damage-control mode this week, reportedly meeting with Elon Musk and a Trump aide to clarify exactly what the recently-approved Expropriation Bill allows and does not allow the government to do. Following President Ramaphosa’s approval of the “expropriation without compensation” clause, civil society and the government have been forced by Trump’s threat of punitive action to clarify that no land grabs were taking place and that strict legal safeguards remained in place to prevent arbitrary state expropriation.

However, this episode offers key lessons for South Africa’s political leaders. While Clause 25 has always allowed for expropriation under specific circumstances, making it explicit rather than implicit in the new law has amplified political optics rather than legal change. The government’s framing of the amendment sought to highlight its commitment to populist policy promises, but the international response was less than favourable. This incident highlights the need for more strategic communication, as poor messaging can create unnecessary controversy, damaging both investor confidence and South Africa’s international reputation. The global backlash underscores the scrutiny South Africa faces and signals that reckless policymaking will not go unnoticed.

ZAR Markets

The ZAR has stabilised after its early-week retreat when South Africa has found itself in US President Trump’s crosshairs. Whether it was because of the land expropriation act, as Trump said, or a warning shot over South Africa’s contrarian positions on issues related to Russia and Palestine, President Ramaphosa had a fine line to walk to appease Washington. The market’s reaction suggests he has thus far succeeded, with the rand recovering some of the lost ground yesterday. The USD-ZAR ran into technical resistance around the 19-handle on Monday, meaning depreciation towards last month’s USD-ZAR highs at 19.2000 seems unlikely anytime soon without another dollar-bullish catalyst. While anything is impossible in Trump’s markets, it is worth noting that there is plenty of dollar-bullish (and rand-bearish) news priced in at these levels, suggesting a recovery towards R18.5000/$ is more likely in the immediate short term.

Global FX Markets

The yuan weakened on Wednesday as China’s markets reopened after the Lunar New Year, shaken by a renewed U.S.-China trade war. The dollar rose over 0.5% against the yuan, despite the People’s Bank of China setting a stronger-than-expected midpoint rate. Analysts suggest China may allow further currency depreciation in response to U.S. tariffs.

Meanwhile, the yen surged over 0.5% to a one-month high due to expectations of more Bank of Japan rate hikes following strong wage data. Other currencies, including the euro and Canadian dollar, rebounded slightly as market volatility eased. Despite tariff tensions, market sentiment remained relatively positive, with investors encouraged by the U.S.’s willingness to delay tariffs on Mexico and Canada after negotiations.