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By NOKUNCEDA MAGAGULA | 2025-01-20
As Donald Trump is sworn-in today, financial analysts predict that the lilangeni (SZL) and rand (ZAR) will weaken during his first 100 days in office.
Economist Sanele Sibiya shared insights on the potential economic implications of Trump's presidency, emphasising the uncertainty surrounding his policies.
“When you look at the 10-year bond yield in the US they are increasing, and that is a sign of uncertainty in the market,” he said.
He added that the financial community was awaiting clarity on Trump's policies following his swearing-in ceremony.
Sibiya stated that one of the key concerns was the likelihood of trade wars as Trump seeks to bring jobs and trade back to the US.
"We should expect quite a number of trade wars, which will strengthen the dollar, and the dollar's strength would also stem from a diversification of trade across the globe,” he said.
The economist said if there was a trade war, countries would look towards different markets and try to move away from the dollar.
Sibiya said the impact of that would be American commodities becoming relatively expensive.
He anticipates volatility in the currency markets, predicting a weakening of the lilangeni as the dollar gains strength in the initial phase of Trump's presidency.
However, Sibiya also offered a more optimistic outlook stating that once Trump's policies take shape after the 100 days, we can anticipate a weakening of the dollar, which would strengthen the lilangeni.’’
He cautioned that the overall trend would depend on whether Trump continues with his current administrative policies or opts for significant diversification in trade.
The economist further explained, a weakening Lilangeni would result in fuel price upticks because the dollar would be stronger.
He emphasised that exchange rate risks were one of the major risks to look out for.
Market
Emphasising that the market will closely monitor how Trump's administration will influence currency valuations.
Reflecting on historical trends, Sibiya noted how the lilangeni performed during the formation of the government of national unity (GNU), stating that the lilangeni gained strength then.
This was due to that the fact that the market had confidence as many political parties with different policies came together.
He mentioned that it also strengthened post-November 5 elections when President Trump took over.
“This historical context underscores the potential volatility in the currency markets as the new administration begins to implement its policies,” he said.
Meanwhile the Minister of Commerce, Industry and Trade Manqoba Khumalo stated that Trump's administration was expected to push for infrastructure development and privatisation in various sectors.
Eswatini’s business sector should seize the opportunity to attract United States of America (USA) private sector investments in infrastructure, especially in energy, transport, and agriculture.
He said the election of USA President Trump could have several implications on Eswatini’s economy and business market.
Highlighting recommendations and key considerations of navigating the new political space.
This includes adapting to trade policies, stating that under Trump, the US had favoured a more protectionist stance, with an emphasis on reducing trade deficits and promoting ‘America First’ policies.
Minister Khumalo said Eswatini should establish clear and attractive incentives for USA investors, such as tax benefits and easing regulatory processes.
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