March 31, 2025
MyCURRENCY News | Week 13 2025
What we know
The Rand traded mostly sideways for the majority of last week but experienced significant volatility on Friday due to political developments in South Africa related to the finalisation of the budget. This led the Rand to weaken to its lowest level of the week, reaching R18.45 against the Dollar.
Other news on Friday included President Cyril Ramaphosa describing the water crisis in the country as “an emergency.” Meanwhile, the potential tariffs imposed by the USA continue to weigh on both the local and global economic landscape.
On a positive note, South Africa with assistance from the World Bank, have put together a $3 billion plan to improve the infrastructure and services in eight major cities. So, while the country has been crippled by the lack of maintenance in the past, there is hope for development soon.
In global news, the US recorded higher-than-expected GDP growth in the fourth quarter of 2024. While investment in the US had somewhat tapered off, this growth was largely driven by increased consumer and government spending, as well as a decline in imports due to implemented tariffs.
The UK, performing well despite the current geopolitical environment, has successfully maintained a steady decline in inflation while experiencing sustained GDP growth.
What others say
Reuters – Wall Street straps in for Trump’s tariff reveal; sees no end to fog of uncertainty
“Investors entered 2025 bullish about pro-growth government policies under Trump, but instead the stock market has swooned since his inauguration.”
Moneyweb – Targeted by Trump, South Africa seeks to reset trade relations
“Still, US investors play an important role in funding South Africa’s current account deficit and any US investment restrictions, should relations deteriorate further, would trigger a major financial shock, Deutsche Bank said in a note last month.”
CNBC Africa – Trump says tariffs coming in April will ‘probably be more lenient than reciprocal’
“The softening stance on tariffs from the Trump administration could soothe investors worried a global trade war will slow down the U.S. economy.”
What we think
Last week we said “As the Rand continues to ride the wave of Dollar weakness, a relatively soft forecast for USD GDP could allow for further Rand gains this week”
The sharp movements in the Rand at the end of last week were driven by internal factors, as ongoing uncertainty over the GNU agreement continues to put pressure on the currency. At any moment, a shift to risk-off sentiment could prompt investors to seek refuge in hard currencies. The hope is that the GNU will reach an agreement on the budget by Wednesday, when the parliamentary vote takes place, which could help stabilise the Rand.
Looking ahead, recent agreements may be positive for the Rand, but given the current climate, it remains difficult to take a definitive stance. Further volatility in the USD/ZAR pair is expected on Friday, with non-farm payroll data set for release. Forecasts indicate weaker-than-expected figures, which could contribute to further USD weakness.
Our range for the week: R18.20 – R18.50.
Have a great week ahead.