Rand and dollar’s steady climb as Trump wanes in popularity good news for consumer spending power

US President Donald Trump’s continued trade war – as well as his constant backtracking on tariffs as he bows to market pressure – have seen his popularity drop. 

However, both the local currency and gold, which is the ultimate safe haven, have benefitted from the situation in the US as the greenback has slowly declined in value. 

What does this mean for South Africa? Continued gains in the gold price lead to a psychological increase in the value of gold miners’ shares and the currency, Dr Azar Jammine, director and chief economist at Econometrix, has said.

The stronger rand, meanwhile, boosts spending power for consumers buying anything in greenbacks – the currency against which all other forex is benchmarked. 

Gold seems set to continue its meteoric rise, having breached $3 500 on April 21 – an all-time high. 

Although the yellow metal is down to $3 320 this morning, this could well be a blip. In February, JP Morgan predicted that gold would hit $3 000 this year. That figure has since been upgraded to $3 675 by late 2025 and even $4 000 in the middle of next year.

Andre Cilliers, currency strategist at TreasuryONE, noted that gold’s decline was due to markets calming down as both the US and China are talking about possible tariff exemptions. 

This move, a recent one by Trump, resulted in the dollar strengthening somewhat, said Cilliers.

 The rand, however, gained a percent on Monday, helped by low trading activity due to the holiday, TreasuryONE’s data showed.

“Traders are watching how South Africa will deal with the budget gap after cancelling the VAT increase. With local risks fading, the rand is now more influenced by global events, like upcoming US jobs and gross domestic product data,” said Cilliers. 

On Tuesday morning, the local currency was trading at R18.55 at around 10am – a relatively flat rate when compared to a year ago. In between last April and now, South Africa saw the election of the first true coalition government since the dawn of democracy, which bolstered the currency.

However, Trump’s April 2 “Liberation Day,” when he announced the initial set of tariffs, pushed the rand down to R18.94. It breached the key R19 level to the dollar on April 8.

Trump’s first announcement of trade duties saw South Africa hit with a 30% import tax for goods imported into the US before he called a cease-fire of 90 days, dropping tariffs back down to 10%. 

The US President’s tariffs, which sent shockwaves around the world and pushed both the S&P500 and Nasdaq down, has also seen his popularity drop. A CNN poll, the results of which were published on Sunday, showed that sentiment is “deeply negative”. 

“Trump’s 41% approval rating is the lowest for any newly elected president at 100 days dating back at least to Dwight Eisenhower – including Trump’s own first term,” the publication reported.

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