The South African rand held steady on Friday as global markets continued on a downward trajectory after a brief rally on Wednesday.

The local currency was trading at R19.28 by mid-morning, holding steady on the gains it has seen in the past two days, after US President Donald Trump announced a pause on most of the ‘Liberation Day’ tariffs that have sparked a fierce trade war.

The rand briefly breached the R19.90 mark early on Wednesday, surpassing the all-time low seen in June 2023, but by Friday it had bounced back by almost three percent.

However, even after Friday’s gains, the rand was still 5.3% weaker than it was at the beginning of April, when it traded at R18.36 against the greenback.

According to Annabel Bishop, economist at Investec, the risks have not been eliminated, however the negative sentiment has halted the downward spiral for the local currency seen earlier this week.

Although a weaker currency is bad news for inflation, the risk for the short term is likely to be negligible.

“The net effect of the fall in the Brent crude oil price, together with the rand’s recent sharp weakness, has only resulted so far in a small petrol price change building over this month to date for the start of May, of 10c/litre,” Bishop said.

“Consequently, the inflation effect for South Africa will be negligible from this source, while in April global food prices fell to date by a very substantial -5.2% m/m, counteracting a lot of the rand’s 4.3% m/m deprecation over the same period.”

Global stocks down again as trade war hangover persists

In a dramatic about-face, Donald Trump on Wednesday announced a 90-day pause on tariffs of 20 percent targeting the European Union and even higher levies on other trade partners, including 24 percent on Japan.

However, tariffs on Chinese imports are not only being maintained but have been hiked to an astronomical 145%, following earlier retaliatory measures by the latter.

Following an encouraging daily gain of 9.5 percent, the broad-based S&P 500 index plunged by 3.5 percent on Thursday. The Dow Jones Industrial Average dropped by 2.5 percent, while the tech-heavy Nasdaq fell 4.3 percent.

Asian markets followed suit on Friday, as Tokyo saw a decline of more than four percent, just a day after witnessing a surge of over nine percent. Other major indices, including Sydney, Seoul, and Singapore, also ended the session in the red, reflecting widespread concern about an impending global economic slowdown.

The Johannesburg Stock Exchange (JSE) All-Share Index was down 0.4% at 85,694 on Friday, having previously recovered from its early-week plunge below the 80,000 mark.

"The sugar high from Trump's tariff pause is fading fast. Bottom line: the world's two largest economies are in a full-blown trade war - and there are no winners," Stephen Innes at SPI Asset Management told AFP.

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