When Donald Trump clinched victory in the 2024 U.S. presidential election, the immediate shockwaves were felt not only across America but around the globe.
As global markets scrambled to respond, one of the first signs of economic turbulence was a sharp drop in the South African rand. By midday following the election, the rand had fallen by 2.5%, hitting R17.82 to the dollar. For many South Africans, the weakening rand was not just a news headline — it was a stark reminder of how deeply intertwined global politics are with their daily lives and personal finances.
The market reaction, with the rand falling sharply, is a direct consequence of the political uncertainty brought on by Trump’s return to power, says Bianca Botes, global director at Citadel. Botes says although this volatility is not entirely unexpected, it underscores the growing uncertainty in the global economy.
For South Africa, this uncertainty could have profound and long-lasting impacts on everything from inflation rates to employment prospects. Whether you’re an investor, a small business owner, or an average consumer, the economic shifts caused by a Trump presidency are already beginning to affect ordinary South Africans — and will likely continue to do so in the months to come.
The dollar surge: How a strong U.S. dollar hits home
One of the most immediate consequences of Trump’s win is the strengthening of the U.S. dollar. As markets adjusted, the dollar surged in value, driving up the cost of imports for countries like South Africa. This is not just an abstract financial phenomenon; it directly affects the man on the street.
For South Africans, a stronger dollar means that imports — everything from fuel to food, electronics, and medicine — become more expensive. The rising cost of essentials is already pushing inflation to uncomfortable levels, and the weak rand only makes things worse. Consumers are feeling the strain as they pay more for groceries, petrol, and daily necessities.
Kar Yong Ang, a financial analyst at Octa Broker, says Trump’s policies — particularly those around trade and tariffs — could exacerbate inflation in South Africa. For the average consumer, this means higher prices for everyday items, a heavier burden on household budgets, and less purchasing power in the face of rising costs.
What does this mean for your personal finances?
Rising costs and inflation: A weakening rand means that prices for imported goods and services — like fuel, food, and technology — are rising. As inflation ticks up, your salary doesn’t stretch as far as it used to, and your purchasing power declines. This could mean fewer disposable income for savings, investments, or even leisure.
Saving for the future: If you have savings in local currency, a weak rand devalues your assets in real terms. The rand’s depreciation also increases the cost of any foreign-based investments, making international exposure more expensive.
For those with mortgages or car loans, higher interest rates would probably increase monthly repayments, further tightening household budgets. Meanwhile, those looking to take out loans for major life events — buying a house, starting a business, or sending kids to university — may face steeper borrowing costs.
Geopolitical tensions: Personal impacts beyond trade
South Africa also finds itself in a delicate diplomatic position. As a member of the (Brazil, Russia, India, China and South Africa) BRICS group, South Africa has maintained relatively neutral or even positive relations with countries like Russia and Iran, both of which often find themselves at odds with U.S. foreign policy. Under a Trump presidency, tensions could rise, forcing South Africa to make difficult choices.
Preparing for economic uncertainty: Practical steps for South Africans
In this uncertain environment, it is more important than ever for South Africans to take control of their personal finances. Here are some steps economists have suggested that you can take to protect your money:
Diversify your investments: Look into investments that can hedge against inflation, such as property, gold, or offshore portfolios. Diversification can help you shield your wealth from the volatility of the rand and the global economy.
Reevaluate your debt: With interest rates likely to rise, it’s a good time to review your personal debt. Paying off high-interest loans now can save you money in the long run.
Track inflation: Keep an eye on inflation trends. As prices for basic goods rise, consider adjusting your budget and finding ways to cut unnecessary expenses.
Invest in skills: If your job is in a sector vulnerable to economic shifts, investing in new skills or diversifying your career could help ensure your financial stability in the face of uncertainty.
PERSONAL FINANCE
