Rand plummets to historic low against the Pound

This came as sweeping new tariffs from the United States came into effect against countries worldwide.

These tariffs included 104% tariffs against Chinese goods, dramatically ramping up a potentially devastating global trade war.

Following the imposition of sweeping 10% tariffs have rocked the global economy since coming into force over the weekend, rates on imports to the United States from exporters like the European Union or Japan rose further this morning.

China is Washington's top economic rival, but also major trading partner and was hit the hardest with tariffs imposed on its products since Trump returned to the White House now reaching a staggering 104 percent.

For South Africa, an additional 30% tariff increase came into effect.

Chief economist at Econometrix, Azar Jammine, told Jacaranda FM News on Wednesday morning that tariff increases are not good news for South Africans.

"It leaves the rent and the oil at new all-time lows, and so that's not very positive for people, especially in South Africa, because a low Rand would lead to higher inflation and no more interest rate cuts.

"On the other side, we are being rescued to some extent by oil prices falling to their lowest levels in four years and that means that even though the Rand is as weak as it is, we may not get the fuel price hikes that would normally be associated with a higher oil price.

He adds that the Rand weakness is contributed by two factors, including the Trump tariffs and the tense financial environment.

"The first is the turmoil on international markets resulting from Trump's imposition of high tariffs on all countries. I don't think it's a case of just because he's imposed tariff increases on South Africa that this is the cause, it's the fact that the entire global financial environment is tense at the moment and that is putting downward pressure on emerging market currencies such as the Rand.

"It's not the only emerging market currency to have weakened, there are many others as well, although the rand has probably taken a bigger knock than the others because of the second factor weighing on it and that is the inability of the political parties to decide whether the government of national unity remains intact or not. "

Jammine adds that the inflation rate is unlikely to increase anytime soon.

"The fact that even though the Rand has depreciated, oil prices have fallen even further than the rand has fallen, means that fuel prices are not going to rise any time soon and in fact might fall significantly further next month because of the extent of the fall in oil prices.

"Whether the Reserve Bank will lower the Repo Rate in May, I doubt it, though, because it will point to the Rand's weakness and the potential longer term inflationary effects and it will probably argue that it would like to wait for things to settle down a bit before it moves."

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