Land expropriation and trade w

Gallo Images / Netwerk24 / Deaan Vivier

Land expropriation and trade wars see-saw the Rand

Staying true to how things have been over the past few months, the trade war between the US and China remains at the forefront of the world’s economic concerns.

Land expropriation and trade w

Gallo Images / Netwerk24 / Deaan Vivier

Over the past week, we have seen so many changes in views that it seems the market doesn’t know which way to move anymore. On Tuesday it seemed that there might be some progress when reports from Chinese state media claimed that there was a chance that the US and China could open talks regarding the de-escalation of the trade war. This put the world in “risk on” mode, which led to the ZAR strengthening from 17.32 to 17.18 early last week.

Late last Tuesday night, President Cyril Ramaphosa announced the decision taken by the ANC NEC to amend the constitution to allow for land expropriation without compensation. Following this late-night announcement, the ZAR weakened from its high of 17.18 to 17.42 in the space of one hour. This is definitely a ZAR-negative event, especially since the global market does not know the intricacies of what this amendment would entail.

The US Fed did not raise rates last week, which was expected, but in a shock to the market, Trump declared that they are investigating the possibility of increasing tariffs on some Chinese goods from 10% to 25%. This reversed the positive sentiment at the start of the week, leading to an emerging market currency sell-off.

On Thursday the UK’s BoE gave its interest rate decision. As expected, they raised rates for the second time in the past 10 years. They increased the rate by 25 basis points to 0.75%, but the major shock was that all of the nine voting members chose to hike rates. This hawkish outlook from the BoE put some backing behind the GBP, which led to the ZAR weakening to a low of 17.63. The positive sentiment was short-lived as Brexit fears resurfaced in the market and the GBP lost ground moving into Friday.

US employment data came out on Friday, and the unemployment rate dropped below 4%. This pushed the USD into a strengthening position against most major currencies.

This week there is very little to take note of on the data front, so most movements in the Rand would depend on politically-driven events. The market will be guided by the ANC’s moves around the land expropriation issue. Any headlines in this regard could cause ZAR volatility.

Date What’s happening Why it’s important
Tuesday 7 August
  • SA Manufacturing Production
  • Expected to drop – not positive to the ZAR, thus could be a negative risk factor
Wednesday 8 August
  • SA Business Confidence Indicator
  • Chinese Import and Export data



  • Business confidence is expected to drop, which will be ZAR-negative
  • Any improvement in Chinese imports would be ZAR-positive since China is one of SA’s larger trading partners
Friday 10 August
  • UK GDP Data
  • US CPI Data
  • GDP is expected to drop, which would be bad for the GBP and thus good for the ZAR
  • US CPI data is expected to come in unchanged, this should not affect the market that much

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-Sebastian Steyn