The South African rand weakened on Thursday as investors turned their focus to President Cyril Ramaphosa’s annual State of the Nation Address (SONA) for insights into the country’s economic and political direction.
As of 06:41 GMT, the rand traded at 18.5925 against the U.S. dollar, marking a 0.3% decline from its previous close.
The weakening currency reflected market caution ahead of Ramaphosa’s speech, scheduled for 17:00 GMT, which is expected to outline key economic reforms and structural policy measures under his coalition government.
While SONA has traditionally not been a major market-moving event, analysts suggest this year’s address could be different. The government’s efforts to navigate South Africa off the Financial Action Task Force’s greylist and stabilize the national fiscus are expected to be central themes.
Investors will be keenly watching for policy shifts aimed at bolstering economic confidence and addressing pressing fiscal challenges.
Ramaphosa’s address comes amid external political pressures, including recent remarks by U.S. President Donald Trump.
Without citing specific evidence, Trump claimed on Sunday that “South Africa is confiscating land” and that “certain classes of people” were being treated unfairly, stating that U.S. funding could be at risk unless the situation was investigated.
Such statements have added to geopolitical uncertainties surrounding South Africa’s economic outlook.
ETM Analytics noted in a research report that Ramaphosa is likely to use SONA as an opportunity to present South Africa’s reform efforts in a more favorable light.
“This SONA will be the main event of the day, capturing the bulk of the market’s attention through the afternoon and evening as coverage unfolds,” the report stated.
South Africa’s benchmark 2030 government bond also showed signs of weakness in early trading, with yields rising by 1.5 basis points to 9.06%, reflecting investor concerns ahead of the address.
As traders and analysts await the president’s remarks, the performance of the rand and government bonds will largely depend on whether the speech instills confidence in South Africa’s economic trajectory and its commitment to reform.
