US claims of SA-Russia arms exchange rattles rand

The rand plunged to within a whisker of its all-time record low to the US dollar on Thursday following claims that South Africa provided weapons to Russia in its war against Ukraine.

After hitting a low of R19.34 – levels last seen in 2020 during the early days of the Covid-19 pandemic – the rand regained some lost ground on Thursday evening, trading at around R19.20 or just over 1.8% weaker against the greenback.

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SA provided arms to Russia

According to a News24 report, US ambassador to South Africa Reuben Brigety claimed that South Africa provided arms to Russia, which invaded Ukraine over a year ago.

He was also quoted as saying America is convinced South Africa is not non-aligned in Russia’s war in Ukriane.

Independent economist Professor Bonke Dumisa said Brigety’s claims were a show of sabre rattling that drove the currency to a more precarious position than it was already in.

The rand began flirting with the R19 mark earlier this week and started Thursday at around R18.90. Just past midday, it breached R19 against the US dollar but later pared some of those losses to trade below R19.

Soon after news of Brigety’s claim surfaced, the rand experienced a “second phase” of weakening, Dumisa said, adding that the US is playing a “very malicious political game aimed at bullying South Africa into taking the side of Ukraine”.

While South Africa cannot be seen to be embracing Russia, it should never be bulldozed into supporting Ukraine, he said.

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Lady R …

Among the allegations made by Brigety, is that a Russian vessel known as Lady R, which docked in South Africa last December in Simon’s Town, carried weapons and ammunition destined for Russia.

In response, President Cyril Ramaphosa’s spokesperson Vincent Magwenya said on Thursday evening that the Lady R matter would be investigated as per a recent agreement between a South African delegation and US officials.

“There was an agreement that an investigation will be allowed to run its course and that the US intelligence services will provide whatever evidence in their possession,” Magwenya said.

He added that the government is disappointed that the US ambassador adopted a counter productive public posture.

Speaking to Moneyweb, Business Unity South Africa (Busa) CEO Cas Coovadia said Ramaphosa needs to assure and provide the country with an urgent answer regarding what happened.

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“The president needs to inform the country urgently on whether we supplied arms to Russia or not … or anybody else … and if we have done it, tell us why,” he added.

“We believe what’s happened has a significantly negative economic impact on the country, and where foreign policy is conducted in a way that has a negative economic impact in the economy, it worries business significantly,” said Coovadia.

Meanwhile, Brigety’s controversial claims follow a chorus of cautionary comments by South Africa’s business leaders who have rebuked the government’s “enthusiasm” for and “close ties” with Russia.

FirstRand CEO Alan Pullinger previously said the state’s relations with Russia were extreme, adding that these presents geopolitical risks, while Standard Bank group chief executive officer, Sim Tshabalala warned that the government must be careful in its stance, not to impact the role of financial institutions.

This article originally appeared on Moneyweb and was republished with permission.
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