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

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

1:02 CAT | 31 Jul 2025

FILE - South African Rand coins are seen in this illustration picture taken October 30, 2020. [File photo: Reuters/Mike Hutchings]

The South African rand was flat on Thursday ahead of an interest rate decision by the South African Reserve Bank (SARB), as the country hopes to strike a trade agreement with the U.S. before new U.S. import tariffs take effect on August 1.

At 0729 GMT the rand traded at 17.9825 against the U.S. 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 June 20.

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

The central bank is due to announce whether it will change is policy interest rate later in the day. Economists polled by Reuters 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 (ZAPPIY=ECI), opens new tab and trade balance (ZATBAL=ECI), opens new tab 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%.

Source: Reuters