By Tannur Anders
JOHANNESBURG (Reuters) -South Africa’s rand, stocks and government bonds fell on Monday after U.S. President Donald Trump said he would cut off funding to the country.
Trump said on Sunday, without citing evidence, that “certain classes of people” in South Africa were being treated “very badly” and he would suspend aid until the matter was investigated.
He said South Africa was confiscating land, 10 days after President Cyril Ramaphosa signed into law legislation that allows the state to expropriate land in the public interest under certain circumstances.
Trump’s comments, made in a Truth Social post, did not directly name the expropriation act.
At 1035 GMT, the rand traded at 18.94 against the U.S. dollar, about 1.2% weaker than its closing level on Friday. Earlier in the day it was down almost 2%.
On the Johannesburg Stock Exchange, the Top-40 index last traded down about 1%, while the benchmark 2030 government bond tumbled as the yield rose 15.5 basis points to 9.21%.
“South Africa has found itself in Trump’s crosshairs,” said Danny Greeff, co-head of Africa at ETM Analytics.
“Whether it is because of the land expropriation act, as President Trump says, or a warning shot over South Africa’s contrarian positions on issues related to Russia and Palestine, President Ramaphosa has a fine line to walk to appease Washington,” Greeff added.
South Africa’s foreign ministry responded to Trump on Monday by saying its expropriation act was not exceptional, while Ramaphosa said he would engage with Trump.
Except for PEPFAR aid, which constitutes 17% of South Africa’s HIV/Aids programme, Ramaphosa said the United States did not provide any other significant funding.
South Africa’s expropriation law aims to address racial disparities in land ownership, and special conditions have to be met before land is seized.
Trump imposed tariffs on Canada, China and Mexico at the weekend, sending global currencies to multi-year lows on Monday.
(Reporting by Tannur Anders;Editing by Alexander Winning, Bernadette Baum and Barbara Lewis)
