The rand strengthened to R16 to the US dollar on Monday as global concerns about the US economy rose. At 5pm on Monday, the rand was sitting at R15.98 to the dollar.
Economist Mandla Maleka told Sunday World on Monday that investors’ confidence has been damaged by the behaviour and statements of US President Donald Trump, which he believes have added to global uncertainty and pushed investors towards precious metals.
Maleka asserted that confusion and errors in Trump’s public remarks have undermined trust in US economic leadership and trade policy.
“President Trump’s illogical economics of confusing Norway with Denmark when it comes to the country upon which resides the company that awards Nobel Peace ‘Prizes’ has engendered investors to choose safe havens in the form of precious metals led by gold.
“Norway awards the Nobel Peace Prize and not Denmark, as Trump would have us believe. His utter mixing of Greenland with Iceland has further emboldened investors to buy and invest in precious commodities, in turn lifting their prices,” Maleka said.
Gold surging beyond expectations
According to Maleka, these reckless comments reflect a challenge around Trump’s understanding of global trade and economics.
South Africa has benefitted from this trend because it is a major producer of precious metals.
Maleka said the rand has been strong since the end of 2025 because gold prices have surged far beyond expectations.
Gold reported an all-time high of over $5 000 per ounce on Monday and he also highlighted that silver had also reached $100 per ounce.
“Countries well-endowed and comparatively well supplied with both gold and silver could easily realise stronger currencies through increased demand for the commodities. South Africa is among those countries; hence, the ZAR has been very strong.
“A stronger currency cheapens the import basket and is positive for inflation. In particular, crude oil prices, comprising over 20% of our import baskets, could be lower in the short term and thus supported interest rate cuts,” he said.
Global trade tensions
He added that global trade tensions are also driving investors toward metals, while an oversupply of oil is pushing crude prices lower.
“The South African car industry, though, will find it difficult to pass through the benefits, as structural impediments on the pricing of new motor vehicles are biased more on the high side.
“However, Chinese vehicles could easily take advantage of the existing situation and flood the car markets with their brands, which are by far cheaper than both German- and Japanese-made vehicles.
“There are risks, though, to the current market situation. Primarily, profit-taking from investors, which could reverse the gains we are enjoying.
“Also, as quick as the precious metals prices rose, there could be a market correction with dire consequences.
“But for now, the Reserve Bank would have to lower borrowing costs faster, empowered in part by the governor’s suggestion of a shift from prime interest to repo rate.
So far the economic situation favours South Africa and other precious metal producers with a possible surplus on the trade balance,” said Maleka.
