President Trump’s actions have sent a strong message to the GNU, highlighting many of SA’s policies as
problematic. The ZAR responded quickly in the Asian session by initially depreciating by 25 cents, although it has
since settled back down near 18.5000 at the time of writing. The SA government has yet to respond, but it is clear
that they have lost the support of the US and will now need to make different arrangements. This further highlights
the need for SA to get its house in order and deliver a powerful budget later this month that prioritises domestic
development and capital formation.
• Whether this weekend’s events will have a longer-lasting impact on the ZAR than what we have already seen
remains to be seen. The anticipated loss of AGOA only impacts the margin, and the loss of Aid could potentially be
made up by other countries that are more predisposed to SA’s geopolitical positions. Within BRICs, there may be
some support for SA that has stood firm against the US, so the ultimate impact may not be as severe, although it is
unclear whether the executive order is the extent of the pressure the US will place on SA. Over and above
potentially losing access to AGOA and Aid, the US could still impose tariffs on SA.
• For now, SA will need to collect itself and stabilise the situation. Fortunately, Afrikaaner bodies have expressed their
support for SA and remaining in SA, and the threat of mass exodus of farmers seems far-fetched at this point,
especially as there have been no land grabs to speak of. However, it is fair to say that the spotlight has been turned
on SA, and the GNU’s actions will be more carefully scrutinised. It is a level of attention that might impose higher
accountability on government officials, which should be welcomed. It does not appear as though the ZAR is about
to lose much more ground, but much will depend on how relations unfold in the coming weeks.