March 10, 2025
MyCURRENCY News | Week 10 2025
What we know
The dominant theme last week was a weaker Dollar, as reflected in the Dollar Index, which traded 3.5% lower. This decline allowed the Rand to reach its strongest level of the year, touching a low of R18.04 against the Dollar. The key question remains: why did the market weaken so aggressively? The answer, however, has only become more unclear.
It would be reasonable to rule out Rand strength as the driver of last week’s currency movement and instead attribute it to a weaker Dollar. This sentiment was reinforced by the performance of other major currencies, such as the Pound and Euro, which reached their highest levels of the year, peaking at R23.70 and R19.91, respectively.
Trump made it clear in the lead-up to his inauguration that he intended to weaken the Dollar, and last week’s decline may be the first indication of how his policies are designed to impact the currency, ceteris paribus.
In the midst of ongoing uncertainty, we may need a new term for forecasters who manage to maintain accuracy. The word that comes to mind is “Alchonomists” – a blend of alchemy and economist. While one can grasp the fundamental mechanics of fewer interest rate cuts, strong inflation data, and currency overvaluation due to increased tariffs, it takes a touch of alchemy to factor in these elements and still explain last week’s weaker Dollar.
What others say
Reuters – British pound extends losses versus euro, steadies against dollar
“The British pound further eased against the euro and hovered at one-and-a-half month lows on Monday following its biggest weekly loss in over two years versus the shared currency, though it steadied against the U.S. dollar.”
Moneyweb – Is this the way to Trump’s heart for SA?
“Africa is seen as a highly attractive market for countries involved in nuclear energy production. The US has a particular interest in the design and development of small modular reactors rather than conventional technology like that used at Koeberg.”
Investopedia – Why the Dollar Is Having Its Worst Year Since 2008, and What It Means For You
“The U.S. dollar is having its worst start to a year since 2008 amid growing concern the Trump administration’s unpredictable economic and foreign policies threaten growth.”
What we think
Last week we said… “the US release their employment figures in the form of Non-Farm Payrolls. Coming from a relatively low base in the prior year, a miss on the 153k target could lead to some Dollar weakness.”
Non-Farm payrolls were released softer than expected, while the US unemployment rate rose from 4.0% to 4.1%. However, the market reaction was muted compared to the movement leading up to the announcement, suggesting that investors were more focused on other, more significant headlines throughout the week.
The European Central Bank cut rates by 0.25%, and the narrative around this hammered on the point of a less restrictive monetary policy in the EU. This in turn boosted market sentiment toward the region.
We look forward to this week’s budget speech, scheduled for Wednesday. Increased market volatility is expected around this highly anticipated event.
On the same day, US inflation figures will be released, with forecasts indicating that inflation is gradually approaching the 2.00% target.
Our range for the week: R17.85 – R18.40.
Have a great week ahead.