The South African rand fell to a record low against the US dollar on Friday after the United States accused the government of President Cyril Ramaphosa of secretly supplying weapons to Russia, threatening trade relations with South Africa’s second-largest trading partner.
The rand breached 19.35 against the US dollar in early trade, surpassing a previous low at the start of the coronavirus pandemic in 2020, a day after the US ambassador to South Africa claimed Pretoria had loaded arms and ammunition on a Russian ship subject to US sanctions. in Cape Town last year.
Robin Brigetti said Thursday he would “bet my life” that South Africa put the weapon on the Lady R, which is owned by a Russian fleet company. He added that “arming the Russians is a very dangerous matter, and we do not consider this issue resolved.”
Ramaphosa’s government was stunned by the US warning and was unable to deny the allegations on Thursday. It announced an investigation, led by a retired judge, into the ship’s docking at South Africa’s main naval base in December.
The rand has already been under pressure this week due to investor concerns about unlimited power outages that have stifled growth in Africa’s most industrialized nation and brought the risk of a total grid collapse closer.
But at stake in the diplomatic storm in the US is South Africa’s preferential access to US markets through the African Growth and Opportunity Act, a law that allows certain African countries to export goods duty-free.
South Africa’s participation was already at stake due to US criticism of signs that Pretoria had sought closer ties with Russia since its invasion of Ukraine, despite officially declaring a non-aligned position in the war.
Ramaphosa recently sent Sidney Mfamadi, his national security adviser, to the United States to explain South Africa’s position on the war and maintain its trade access to the United States.
Despite Ramaphosa’s announcement of an investigation, a minister in his presidency categorically denied on Friday that weapons were loaded on the ship and that it struck the US.
“We cannot be intimidated by the United States… Khumbudzu Ntshaveni told South African Radio 702.
South Africa’s defense minister said last year that the Lady R had delivered a cargo to the country’s defense forces, but it was not disclosed what might have been loaded next on the ship on the return voyage.
The US State Department said Washington had raised the issue directly with South African officials. “The United States has serious concerns about the docking of a sanctioned Russian cargo ship at a South African seaport in December last year,” spokesman Vedant Patel said.
Ramaphosa’s ruling African National Congress is under pressure at home to explain the incident faster, given the economic risks.
Our government’s lack of transparency on allegations of arms supplies to Russia. . . “You have brought South Africa very close to a chain of events that will spell great economic hardship for our nation,” said Wayne Dovinage, chief executive of Roll Back Tax Abuse, a South African transparency watchdog.
“This is not rocket science,” Doving added. “The authorities only need to tell us if anyone in the government authorized the loading and supply of whatever was on Lady R, and if so, whether the inventory included weapons and/or ammunition.”