South African rand drops to one-month low as tariff cloud hangs over interest rate decision

Source: Reuters.

At 0729 GMT the rand traded at 17.9825 against the US dollar, near its previous close and its weakest in over a month.

The risk-sensitive currency fell sharply on Wednesday, closing past 18 rand for the first time since 20 June 2025.

South African goods face a 30% import duty in the US In exchange for reducing the rate, South Africa has offered to buy US liquefied natural gas, simplify rules for US poultry imports and invest $3.3bn in US industries including mining.

The central bank is due to announce whether it will change its policy interest-rate later in the day. Economists polled expect a 25 basis-point cut.

Andre Cilliers, currency strategist at TreasuryONE said if the bank lowers its main lending rate, it could be the last cut for the current cycle given the tariff unease.

ETM Analytics said in a research note that "with such tariff uncertainty, it seems somewhat counterintuitive for the Sarb to be reducing interest rates".

Investors will also look to June producer inflation and trade balance figures on Thursday for clues into the health of Africa's most industrialised economy.

South Africa's benchmark 2035 government bond was weaker in early trade, with the yield rising one basis point to 9.82%.