September 15, 2025
MyCURRENCY News | Week 37 2025
What we know
The Rand has been range-bound for the past 14 weeks, trading predominantly between R17.50 and R18.15 to the Dollar. The question has not been so much if the Rand is going to strengthen further, but when. We have seen the Rand retest the R17.42 level multiple times over the past couple of months, and last week it finally strengthened beyond this point, with the market trading to a low of R17.31.
The key driver last week was the US CPI announcement, the result of which was a mixed bag. Year-on-Year inflation came in at the forecasted 2.9%, while Month-on-Month inflation was released slightly higher than forecast at 0.4%. The focal point was core inflation, which remained unchanged at 0.3%.
These figures highlight the Federal Reserve’s ability to keep inflation under control, which provided further certainty around US interest rate cuts. At present, 94% of the market is expecting a 0.25% cut at the next meeting, with 74% expecting a 0.25% cut in each of the three remaining meetings this year.
On the back of these inflation figures, and their implications for US interest rates, the Rand managed to trade at the strongest levels we have seen this year.
The ECB also had its interest rate announcement last week, deciding to keep rates fixed at 2.15%. This announcement was released on Tuesday, and while other major currencies traded stronger against the Rand, the Euro weakened.
GDP figures were released in both the UK and South Africa. In the UK, GDP growth was flat at 0.0% month-on-month. Locally, GDP grew by 0.7% compared to the first quarter, although it contracted by 0.2% compared to the second quarter of last year.
What others say
Reuters – ECB’s Nagel says further rate cuts would threaten price stability
“The European Central Bank (ECB) left interest rates unchanged on Thursday, as expected, and maintained an upbeat view on growth and inflation, dampening expectations for any further cuts in borrowing costs”“
CNBC – Trump says he’s ready to put ‘major sanctions’ on Russia if NATO nations do the same
“He also urged NATO countries to impose “50% to 100% TARIFFS ON CHINA,” which he said should be withdrawn after the Russia-Ukraine war has concluded.“
Moneyweb – Sarb’s new inflation goal faces a key test
“South African inflation suffers from a degree of stickiness because of high administered prices like electricity and water, which means it could take many months for price pressures to settle at a lower level.“
What we think
Last week we said, “Investors will closely monitor the PPI on Wednesday and the inflation data on Thursday as their final indicators ahead of the Federal Reserve’s interest rate decision on 17 September, with a 0.25% cut widely expected.”
With the Fed meeting scheduled for Wednesday this week, it is reasonable to expect a 0.25% interest rate cut. The market has already priced in this expected cut and, as we have seen in the past, when the market prices in an interest rate cut ahead of time there may be an adverse reaction on the day.
Higher volatility is expected this week regardless. However, once the dust settles, lower interest rates generally place sustained pressure on a currency, with expectations for the Dollar to continue its downward trajectory.
Other interest rate decisions this week will come from Canada, the UK and Japan. Interest rates are forecast to remain unchanged in both the UK and Japan, while the market is expecting a 0.25% cut from the Bank of Canada.
Locally, inflation figures will be released on Wednesday, with forecasts pointing to a decrease.
Our range for the week: 17.25 – 17.55.
Have a great week ahead.