South African rand extends losses as traders await outcomes of rate meeting, US tariffs

JOHANNESBURG: The South African rand weakened in early trading on Tuesday, with investor attention pinned on the outcome of the country’s monetary policy meeting and updates on tariff negotiations as it faces a 30% levy on its exports to the U.S.

At 0733 GMT, the rand traded at 17.9725 against the dollar , about 0.6% weaker than Monday’s close.

ETM Analytics in a research note said the risk-sensitive currency is expected to remain vulnerable as there were still no updates on the country’s progress in negotiating a trade deal with the U.S. while the August 1 deadline edges closer.

“It may be that the announcement is only made on Friday, which may help clarify SA’s trade position with the U.S., but in the lead-up to that, there is some concern that SA’s negotiators have not made much progress and will have to accept whatever the U.S. puts on the table,” said the note.

The nation’s central bank will announce its rate decision on Thursday, when another 25 basis point cut is expected by economists polled by Reuters.

Central bank data earlier showed that South Africa’s M3 money supply growth last month was at 7.27%, up from 6.86% in May. Credit growth for June came in at 4.98%, unchanged from the previous month.

“Credit growth is starting to pick up, reflecting the impact of lower interest rates and some improvement in household finances due to rising income and lower inflation,” said Nedbank economists.

South Africa’s benchmark 2035 government bond was weaker in early deals, as the yield rose 2.5 basis points to 9.825%.