On Friday morning, the South African rand experienced a significant drop, plunging into a free fall and reaching a historic low of R19.47/$. This sharp decline occurred amidst the ongoing scandal involving South Africa’s arms trade with Russia.
In April 2020, the previous all-time low exchange rate of R19.35/$ was recorded, which was a result of the widespread panic caused by the pandemic.
In a news development on Thursday, Reuben Brigety, the US ambassador to South Africa, made a startling allegation. According to him, Russian forces obtained arms from South Africa in the previous year. The United States leveled an accusation, claiming that South Africa has provided weapons to Russia through a clandestine naval operation.
This allegation has the potential to create a diplomatic crisis for South African President Cyril Ramaphosa, particularly in relation to the country’s relationship with the Kremlin and its stance on the ongoing Ukraine conflict. The accusation is likely to prompt calls for further investigation and could have significant implications for regional and international security.
South Africa has found itself in a delicate diplomatic position concerning the Ukraine conflict, given its strong economic and trade ties with the United States and Europe. Although its trade with Russia is relatively minor, South Africa has a long-standing relationship with Moscow that dates back many decades, to a time when the Kremlin provided support to the African National Congress in its fight against apartheid.
As a result, South Africa must navigate carefully in order to maintain its relationships with both sides while avoiding taking sides in the conflict.
According to Ramaphosa’s office, an impartial investigation into the accusations will be established, presided over by a retired judge. Additionally, discussions have taken place between authorities from South Africa and the United States regarding the ship, resulting in an agreement to permit ongoing investigations.
The news has sent shockwaves through the financial markets and raised concerns about the future stability of the country’s currency. Experts are closely monitoring the situation, and Investors are advised to exercise caution during this tumultuous time.
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