January 07, 2025
MyCURRENCY News | Week 1 2025
What we know
Just like that, the year rolls in, and we are back… back within the range that began forming at the beginning of 2023 for the USD.ZAR, which persisted throughout 2024, between a yearly low of R17.03 and a high of R19.39 against the Dollar.
They say history repeats itself, and however true the prophecy may be, these rates aren’t the blast from the past that importers were hoping for going into the first full business week of 2025.
The market closed trading last year, and opened this year, at a rate of R18.88 to the US Dollar, which brought the USD.ZAR near the mid-point of the range in reference.
Two focal points that led to a stronger USD were the Federal Reserve’s interest rate outlook for the year, and optimism around how a Trump presidency will impact the US economy and its currency.
The FED has now moved the proposed number of interest rate cuts that they are expecting for 2025, from four to two, as they took a predictable, but firm stance on controlling inflationary pressure.
Locally, our interest forecast projects three cuts of 0.25% for 2025 as the SARB takes a similar stance to the FED to maintain control of inflation.
What others say
Reuters – US companies rush to bond market in fundraising flurry
“U.S. companies rushed to the corporate bond markets on Monday as what is usually a seasonal fund-raising spree over the first few days of a new year gained extra momentum to get ahead of any further rise in Treasury yields – which would increase funding costs – after jobs data on Friday.”
CNBC – Several commodities face headwinds in 2025 — but this metal’s record rally is set to continue
“Commodity prices are largely expected to fall in 2025 due to a sluggish global economic outlook and a resurgent dollar, but gold and gas prices are poised to rally this year.”
Moneyweb – Sarb repo rate expected to be at 7.25% by year-end, says Bloomberg Economics
“Inflation has remained below the mid-point of the Sarb’s 3%-6% target range since August, giving policymakers scope to continue lowering borrowing costs in 2025, it says.”
What we think
As the cogs begin to turn and more information flows into the marketplace, volatility is likely to start picking up.
The first FOMC meeting for the year takes place on Wednesday and should provide vital insight into the economic and financial position of the US and add further context to the expected interest rate decisions.
Furthermore, this week ends with the high-impact Non-Farm payroll announcement on Friday, providing the first look at US employment figures going into this year and its close connection to consumer spending; it is forecast that fewer jobs were added to the payroll in December compared to November.
Our range for the week: R18.20 – R18.90.
Wishing all our readers a great start to the new year, and a prosperous year ahead.