American tension on the South African Rand (ZAR) because of Trump

Relations between the United States and South Africa just underwent a negative development. President Donald Trump has asked the intelligence community and its former CIA director Mike Pompeo to take a closer look at agricultural expropriations in South Africa. “I have asked Secretary of State Pompeo to closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers,” wrote POTUS in a tweet on August 22, 2018.

His South African counterpart Cyril Ramaphosa did not welcome the initiative and his spokesman Khusela Diko said Trump “is misinformed”. While South Africa’s extreme left would have convinced Ramaphosa to allow expropriations without compensation through constitutional reform, the general elections of 2019 could be tough.

Immediately after Donald Trump’s tweet, the South African Rand (ZAR) lost 1.52% against the US dollar (USD). According to Cyceon, nothing should be excluded from the Trump administration in this case, including potential sanctions – even if this seems unlikely – if the situation continued to deteriorate in South Africa. So we could end up with a situation similar to that of Turkey which saw its lira (TRY) fall against the dollar after the decision of Donald Trump to sanction the country, mainly because of its developments with Russia and Iran.

© Chart provided by TradingView.com, add-ons by Cyceon.