By Tannur Anders and Sfundo Parakozov
JOHANNESBURG (Reuters) -The rand struck an all-time low in jittery trade on Wednesday, as U.S. President Donald Trump’s trade war and the risk that South Africa’s market-friendly coalition government could split unnerved investors.
The rand fell as low as 19.9325 to the dollar, weaker than the previous record low of 19.9075 hit in June 2023, data from the London Stock Exchange Group showed.
It had recovered to 19.81 by 1533 GMT, but it was still down 0.2% on the day and more than 3% lower this week.
“The past few trading sessions have been a wild ride, and there are no indications as yet that the volatility is about to end,” said Danny Greeff, co-head of Africa at ETM Analytics.
China and the European Union announced new tariffs on U.S. goods on Wednesday as the standoff between the United States and major economies showed no sign of resolution.
Nicky Weimar, chief economist at South African bank Nedbank, said the rand was also being dragged lower by local politics.
The two biggest parties in the coalition government, the African National Congress (ANC) and Democratic Alliance (DA), disagreed sharply over the budget, with the DA voting against it in parliament and going to court to try to block it.
Despite both parties saying on Tuesday that they were not yet walking away from the Government of National Unity (GNU), investors are worried that the pro-business DA could quit the coalition or be forced out by the ANC.
“Investors are starting to price in the possibility that the current GNU, anchored by the ANC and the DA, will dissolve,” Weimar said.
The Johannesburg Stock Exchange’s Top-40 index closed 2% lower. The benchmark 2030 government bond price also dropped, with the yield rising 10.5 basis points to 9.305%.
(Reporting by Tannur Anders and Sfundo Parakozov;Editing by Alexander Winning and Emelia Sithole-Matarise)
