JOHANNESBURG (Reuters) – South Africa’s rand recovered further against a weaker dollar on Monday, extending a recent bout of extreme volatility linked to U.S. President Donald Trump’s trade war and worries that a key coalition partner could leave the country’s government.
At 0638 GMT, the rand traded at 18.9675 against the dollar, about 1% stronger than its previous close.
The dollar last traded about 0.6% weaker against a basket of currencies.
“The markets were spooked and confused last week. This is set to continue this week,” said Adam Phillips, treasury specialist at Umkhulu Treasury.
The risk-sensitive rand has see-sawed on Trump’s changing tariff policies, which have escalated tensions between the U.S. and the world’s second-biggest economy, China.
Over the weekend Trump exempted smartphones and other electronics imported largely from China from his tariffs, suggesting a growing awareness of the effect the measures will have on consumers, though U.S. Commerce Secretary Howard Lutnick said the reprieve was temporary.
The rand has also moved on local headlines about tensions in South Africa’s coalition government.
The two biggest parties in the coalition, the African National Congress (ANC) and the Democratic Alliance (DA), clashed over the budget, leading to speculation that the DA could quit or be forced from the Government of National Unity.
The ANC and DA met on Saturday to discuss the impasse. Neither party gave a detailed readout of their talks, but both described them as constructive.
If the ANC and DA end their dispute, analysts say the rand could rally.
“Continue to expect big moves, although maybe not as big as last week,” Phillips said.
South Africa’s benchmark 2030 government bond also strengthened in early deals, as the yield fell 8 basis points to 9.225%.
(Reporting by Tannur Anders; Editing by Alexander Winning and Jamie Freed)
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