Rand Weakens Against Dollar After SA-Russia Arms Deal Allegations From US Embassy, Value Plunges to Record Low

Friday, May 12, 2023 at 7:13 PM by Lerato Mutsila

The South African currency has taken a massive knock in the aftermath of accusations from the US government
The US ambassador to South Africa alleges that SA furnished the Russian military with weapons
Coupled with the energy crisis, the remarks have caused the rand to plummet to a record-setting low

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JOHANNESBURG - The South African rand took a tumble when it dropped 2.4% to R19.34 to the US dollar.

Rand continues to weaken amid allegations of a clandestine SA-Russia arms deal — The Rand continues to weaken amid accusations of a clandestine SA-Russia arms deal from the US government. Image: Stock photo
Source: Getty Images

This comes after the US Embassy in South Africa levelled accusations against SA's government, alleging that Pretoria supplied the Russian military with weapons in 2022.

The US allegation is only the latest blow to SA's currency, as the rand has been underperforming its peers in emerging economies.

A mixture of SA's energy crisis, global monetary tightening and now the arms deal accusation have increased the nation's risk factors and made the Rand one of the worst-performing currencies in the developing world, Daily Maverick reported.

Economists predict SA GDP contraction of 0.2%

The forecast for economic growth is not looking good for that embattled country either.

JP Morgan released a revised note on research claiming that it predicts a 0.2% contraction of SA's GDP as opposed to its previous forecast of 0.3%, SABC News reported.

This will reportedly create the perfect environment for further rand weakness.

South Africa rallies against the weakening of the rand

Below are some comments:

@AshyRamcha71167 suggested:

"Then I think it's time to de-dollarise and progress forward."

@RamafaloMoses asked:

"What is it that has weakened the Rand to this level? Is it because of lies that were cooked by the USA yesterday about supplying Russia with weapons or the loadshedding issue?? or both?"

US warns countries against Russian military involvement after embassy accused SA of supplying arms to Russia

In a related story, Briefly News reported that South Africa has once again landed in the crosshairs of the United States over its engagement with the Russians.

The US Office of Sanctions Coordination Ambassador Jim O'Brien warned countries that it would be wise for them to disengage with the Russian military.

Though O'Brien didn't mention South Africa specifically, the warning comes after the US ambassador to South Africa, Reuben Brigety accused the country of supplying Russia with arms, SABC News reported.