May 26, 2025
MyCURRENCY News | Week 21 2025
What we know
The Rand experienced significant follow-through last week, strengthening to its best levels of the year and closing at R17.80 to the Dollar. This rally was partially driven by a much weaker Dollar, resulting from a prevailing risk-on sentiment throughout the week, as well as local factors that were received positively.
Budget 3.0 was the main local focus last week, with the key question being how the government intends to fill the deficit created by the cancellation of the proposed VAT hikes. The answer: a reduction in government spending.
While the road to the final Budget 3.0 release was somewhat rocky for the GNU, Finance Minister Godongwana noted that the process was necessary for the various parties to understand each other’s positions on key policies—and that it has, in fact, brought our new government closer together.
President Ramaphosa also had his day at the White House last week. While the overall tone was positive, there appeared to be a misunderstanding between the concept of “White Genocide” and South Africa’s extremely high crime rate. Nevertheless, the market remained largely indifferent, with the Rand trading holding steady throughout and after the meeting.
What others say
Reuters – Europe gains traction amid doubts over US assets, global money managers say
“U.S. assets plummeted in April after economists slashed odds on the likelihood of a U.S. recession, leading some investors to seek refuge in perceived safe havens, such as gold and relatively undervalued European stocks and bonds.“
CNBC Africa – South Africans exasperated by Trump false claims during Ramaphosa meeting
“Ramaphosa included popular white South African golfers in his delegation and he had hoped talks with Trump in the White House on Wednesday would reset relations with the United States, which have nosedived since the U.S. leader took office in January.“
Moneyweb – Trump threatens a 50% tariff on EU goods starting in June
“The EU is also moving forward with preparing countermeasures if negotiations fail to produce a satisfactory outcome. The trade bloc has put together plans to hit €95 billion of US exports ($107 billion) with additional tariffs in response to Trump’s “reciprocal” levies and 25% tariffs on cars and some parts.“
What we think
Last week we said that “After the Dollar index lost some ground throughout last week, global risk-on sentiment as well as local factors driving rand gains will likely carry further gains through the week.”
The Rand posted an outsized gain against the Dollar compared to other hard currencies, as weakening US sentiment led to a continued sell-off of the Dollar. This pushed the Dollar Index back below the 100 level, allowing the Rand to approach its weekly low of R17.70 to the Dollar.
This week, local focus turns to the release of GDP figures, which aligned with Finance Minister Godongwana’s comments on Thursday, are expected to be softer than previous estimates. This raises concerns about South Africa’s longer-term growth prospects.
The week is backloaded with key global data releases, including Australian inflation figures and the New Zealand interest rate decision on Wednesday, preliminary US GDP on Thursday, and GDP figures from both the EU and Canada on Friday.
Given that Rand strength has persisted for six consecutive weeks, and with limited Rand-specific news expected this week, some degree of market correction may be on the cards.
Our range for the week: R17.70 – R18.05.
Have a great week ahead.