South Africa’s first US trade deal revealed, and warning over chicken prices

The South African rand weakened on Monday, with the central bank’s interest rate decision expected to be the main focus this week.

The rand was trading at R17.86 against the dollar, reflecting a 0.2% decline from its previous close.
The South African Reserve Bank is set to announce its monetary policy decision on Thursday.

In March, it paused a cycle of rate cuts due to concerns stemming from US President Donald Trump’s global trade war and ongoing domestic budget disputes.

Economists surveyed by Reuters predict that the bank will resume its rate cuts, reducing the repo rate by 25 basis points to 7.25%.

On Tuesday, 27 May, the rand was trading at R17.88 to the dollar, R24.25 to the pound and R20.36 to the euro. Oil was trading slightly lower at $64.60 a barrel.

Here are five other important things happening in and affecting South Africa today:

South Africa and US trade deal: South Africa has proposed a trade deal with the US to purchase liquefied natural gas (LNG) worth around $1 billion annually. In exchange, the country would receive duty-free status for exporting 40,000 vehicles a year to the US, according to cabinet minister Khumbudzo Ntshavheni. [News24]

Chicken price warning: The government is expected to temporarily ban poultry imports from Brazil following an avian influenza outbreak there. Brazil supplies over 84% of South Africa’s poultry imports. Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, noted that while South Africa will cover much of the gap, consumers should anticipate price increases for some chicken products. [eNCA]

Parliament summons Communications Minister: Communications Minister Solly Malatsi has been summoned before Parliament to explain a proposed ICT policy change today, 27 May. The change could allow players like Starlink to enter the market. Khusela Sangoni Diko, chairperson of the communications committee, has raised concerns about its legality and described the situation as a “spectacular mess up of process.” [Daily Maverick]

New inflation target expectations: The Reserve Bank may revise the country’s inflation target for the first time in 25 years, potentially reshaping monetary policy and lowering long-term interest rates. Investec economist Lara Hodes noted that expectations are for a narrower range instead of a single target, possibly decreasing to around 3% to 5% initially, in line with key trading partners. [Business Day]

R100 million EV boost for South Africa: Zero Carbon Charge has received a funding injection of R100 million from the Development Bank of Southern Africa (DBSA). The company is focused on building “climate-resilient” electric vehicle (EV) charging stations, which will help South Africa transition to a net-zero transport economy. [MyBroadband]