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Rand Crashes after US Accuses SA of Arming Russia

The United States (US) has accused the South African government of supplying ammunition to the Russian Federation through a ship that docked at a naval base in Simon’s Town in South Africa’s Western Cape province late last year. This shock allegation highlights the increasingly strained relations between the US and South Africa and places billions of Rand worth of preferential trade between the countries at risk. The US Ambassador’s allegations caused the Rand to plummet when markets opened, with the Rand currently at R19.47 to the USD, a record low. South African markets were already volatile given the country’s continued electricity woes and recent greylisting, with the weakening trend likely to continue. The apparent continuing deterioration of relations between South Africa and the US puts a highly lucrative trading relationship at risk for South Africa, with deals relating to the African Growth and Opportunity Act (AGOA) valued at more than $2.58 billion annually. This relationship and the economic benefits to South Africans seem to be precariously placed.