March 17, 2025
MyCURRENCY News | Week 11 2025
What we know
Volatility remained fairly low last week despite two major news releases: the South African Budget Speech and the release of US inflation figures. Typically, these events would move the markets, but the market appeared unaffected – perhaps waiting to make its next move.
The Rand traded within a modest 34-cent range last week, performing well against the Dollar and closing at R18.16.
The GNU made a partial recovery from its initial wobble over VAT hikes, with the proposed increase adjusted from 2% to 0.5% per year for the next two years. However, this was not enough to unify the government on the VAT decision.
Beyond VAT hikes, the key issues under discussion included infrastructure development and the need for inclusive growth, along with the usual focus on reducing the government deficit. Balancing these priorities is challenging, as South Africa must ensure it has the necessary resources to address potential geopolitical risks while avoiding unnecessary overspending.
Further to this, our US Ambassador, Ebrahim Rasool, was removed by the Trump Administration, which is yet another nail in the coffin of US-SA relations.
US inflation figures came in slightly lower than expected at 2.8% and as the FED continues to manage inflation downward, interest rate cuts could become more likely.
What others say
Daily Maverick – ‘Persona non grata’ – US expels SA ambassador Ebrahim Rasool from Washington
“Rasool was expelled barely two months after he arrived in Washington. It was the latest incident in the deterioration of diplomatic ties between Pretoria and Washington after US President Donald Trump returned to the White House in January.”
Reuters – Trump to speak with Putin on Tuesday about ending war in Ukraine
“U.S. President Donald Trump said he plans to speak to Russian President Vladimir Putin on Tuesday and discuss ending the war in Ukraine, after positive talks between U.S. and Russian officials in Moscow. “We want to see if we can bring that war to an end,” Trump told reporters on Air Force One during a flight back to the Washington area from Florida.”
Business Tech – Bad news for interest rates in South Africa
“Expectations for average inflation in two years’ time – a measure the central bank’s monetary policy committee uses to inform its decision-making – edged up to 4.7% in the first quarter.”
What we think
Last week we said… “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 market is likely to be on high alert this week due to a surge in data releases. Interest rate decisions are scheduled for the US, UK, Switzerland, Japan, and South Africa, alongside the release of local inflation figures.
As always, the market will take direction not only from these data points but, more importantly, from the accompanying discussions on monetary policy outlooks.
Our range for the week: R17.95 – R18.40.
Have a great week ahead.