Rand collapses amid market turmoil after GNU jitters and Trump tariff shock rattle investors

7 Apr 2025

The market carnage unleashed by Trump's barrage of tariffs last week extended into ‘Orange Monday’. After tanking at the opening bell, the JSE went on a wild ride and by the closing bell little was changed on the day. But the rand remained in free fall.

South African markets started the week where they left off on Friday: in utter turmoil as US President Donald Trump's ill-conceived tariffs and concerns about the Government of National Unity (GNU) combined to shock local investors to their core.

Market movements were dizzyingly wild on what a number of wags have dubbed "Orange Monday," with the JSE's All-share index plunging almost 5.0% minutes after it opened as it followed Asian markets into the deep red before rebounding.

It finished Monday barely moved from its opening levels - a stark contrast to Europe, where stocks continued to tumble. The weaker rand has made South African stocks a bargain for foreign investors and there clearly seems to have been some bargain hunting at work on Monday.

The JSE's main index has lost close to 9.0% of its value since last Wednesday when Trump roiled global markets with his "Liberation Day" tariff announcement that included a pair of remote islands inhabited only by penguins and seals.

The rand was the biggest loser on Monday as it extended last week's losses that have taken it back above 19/dlr.

In late trade on Monday, it was fetching 19.53/ dlr - a loss of 3.7% since its levels last Wednesday.

The rand could now target its historic low of 19.87/dlr which was reached in May 2023. If the currency remains at these levels or loses further ground in the coming weeks then there is no way that the Reserve Bank will even consider cutting rates at the next scheduled meeting of its Monetary Policy Committee (MPC) in late May.

Indeed, it could conceivably hike rates if the rand's rout rekindles the flames of inflation.

Worryingly, the rand is bucking the global trend as the dollar has come under pressure against most major currencies - a situation that would normally lift the domestic currency against the greenback.

What this means for you

If you have exposure to equities through a retirement fund or other investments, Donald Trump has "liberated" you from your wealth. You are probably poorer today than you were this time last week and when inflation heats up because of the rand's collapse your savings will erode further.On a global scale, trillions of dollars in value have evaporated from stock markets in the wake of Trump's barrage of tariffs.

But concerns about the GNU and the "sentiment shock" unleashed by Trump's tariffs - which have been slammed by virtually every economist on the planet as pointless and likely to lead to a global recession - has left a highly liquid emerging market currency such as the rand in an extremely vulnerable position.The rand's woes have been further compounded by commodity prices which have mostly tanked since Trump's tariffs were unveiled.

"The collapse in commodity prices has afflicted the rand, as the broad-based, but unequal tariff increases from the US has negatively affected expectations on global and US growth, and so global demand for basic materials," said Investec chief economist Annabel Bishop.

South African bond yields also gyrated on Monday, climbing over 12 basis points to 11.52% before dropping to 11.43%. These are levels that were last seen at the start of the Covid-19 pandemic in 2020. DM

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What this means for you