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The South African currency’s currency exchange rate versus the U.S. dollar plunged to a new all-time low of ZAR19.51: US$1 on May 12. The rand’s most current fall came a day after the U.S. ambassador to South Africa accused the country of secretly supplying weapons to Russia. Banking huge JP Morgan stated it now predicts South Africa’s gdp to agreement by 0.2%, below the earlier favorable forecast of 0.3%.

South Africa Denies It Supplied Ammunition to Russia

The currency exchange rate of the South African currency versus the greenback fell to a new all-time low of 19.51 systems of the rand for each dollar on May 12. The rand’s plunge came a day after the African country was accused of secretly supplying ammunition to Russia by a United States ambassador.

With this most current drop, the South African rand diminished by more than 5% in simply one week and more than 12% because the start of the year. Before striking the new low, the South African rand’s previous lowest level was set on April 5, 2020.

South African Currency Plunges to New Low Versus the Dollar a Day After the US Accused Country of Secretly Supplying Ammunition to Russia

Reuben Brigety, the U.S. ambassador to South Africa, exposed on May 11 that his country thinks Russia, which attacked Ukraine in Feb. 2022, occupied of the weapons in late 2022. Addressing reporters after dropping the bombshell, Brigety stated the matter was exceptionally major which the United States does “not consider this issue to be resolved.” The ambassador nevertheless stated the U.S. is still crazy about seeing South Africa practice its so-called “non-alignment policy.”

However, in reaction to the accusations, the U.S. authorities was summoned for a conference on May 12 by the South African foreign affairs ministry. On the exact same day, Clayson Monyela, the representative for the ministry, stated in a tweet that his country has “no record of an approved arms sale by the state to Russia related to the period/incident in question.” Earlier, South African President Cyril Ramaphosa’s workplace recommended that a questions to “establish the facts and role players” was currently underway when the U.S. ambassador went public with the accusations.

Dire Consequences for South Africa

Meanwhile, an earlier News 24 report stated the South African rand had actually lost almost 30 cents simply minutes after Brigety declared that a Russian ship called “Lady R” was packed with arms and ammunition when it docked at a marine base in Cape Town in December 2022. While South African authorities have actually moved rapidly to reject Brigety’s accusations, some financial analysts alerted of alarming effects for the country if the U.S. chooses to strike back.

According to Nolan Wapenaar, the co-chief financial investment officer of Anchor Capital, the U.S. federal government will likely react to the claims by obstructing South Africa’s gain access to to American markets. Wapenaar discussed:

[Brigety’s allegation] is most likely to have alarming effects for SA, which might lose its African Growth and Opportunity Act (AGOA) preferential duty-free market gain access to to the US.

Meanwhile, in its most current research study note, the U.S. banking giant JP Morgan apparently stated it now anticipates South Africa’s gdp (GDP) to agreement by 0.2% in 2023. This remains in contrast to the previous forecast of a 0.3% development rate. The banking also alerted that its currently downhearted bank account forecast for the African country might get worse if an electrical power scenario is not dealt with.

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