South African rand nosedives as Trump wins US election

Source: Reuters.

Republican Trump recaptured the White House on Wednesday, 6 November 2024, by securing more than the 270 Electoral College votes needed to win the presidency, four years after leaving office.

At 1525 GMT, the rand traded at 17.68 against the US dollar, down about 1.7% on its previous close. The currency fell as much as 2.5% earlier in the day.

The dollar hit a four-month peak and was set for its biggest one-day rise since March 2020. It was last up about 1.8% against a basket of currencies.

Trump's win has fuelled so-called "Trump trades" with markets anticipating a continuation of his policies, which could mean higher economic growth in the short term but also potentially inflationary pressures.

"If Trump's policies are enacted fully, we will probably see the Federal Reserve not cut rates as much," said Izak Odendaal, chief investment strategist at Old Mutual Wealth.

But the Fed is still likely to cut interest rates by 25 basis points when it announces its latest policy decision on Thursday, Odendaal said.

Complicating the rand's situation was South Africa's mid-term budget statement last week, said Zain Vawda, market analyst at MarketPulse by Oanda.

The government forecast wider budget deficits and higher debt over the next three years, and ratings agency Fitch on Monday said it had doubts over the government's ability to meet some of its targets.

"This leaves the rand vulnerable to further losses against the greenback heading into the festive season," Vawda said.

South Africa's benchmark 2030 government bond also fell, with the yield up 8.5 basis points to 9.4%.

On the Johannesburg Stock Exchange the blue-chip Top-40 index closed about 1.6% down.