May 19, 2025
MyCURRENCY News | Week 20 2025
What we know
Last week the Rand managed a fifth consecutive week of gains against the US Dollar despite a 50-cent trading range. The Rand reached a high of just below 18.50 before trading down to below 18.00 briefly on Thursday.
The start of the week introduced rolling power cuts, which were unplanned rather than the planned load shedding that we have become accustomed to in South Africa. This news hit the rand hard and fast but seemed to have less of a lasting impact than load shedding.
The positive sentiment came after an announcement that the inflation target in South Africa may be adjusted downward. While we wait to see if this will change, the idea of a lower target, keeping monetary policy tighter and keeping price increases under pressure has had a positive impact on the Rand.
It was an uneventful week in terms of developed market data releases. US inflation data came in flat. In the UK unemployment remained unchanged while GDP showed a marginal uptick.
What others say
Moneyweb – Godongwana says no to wealth tax
“Finance Minister Enoch Godongwana said in parliament that he does not think a wealth tax is a good idea to find the money to make up the budget shortfall.“
Reuters – Moody’s downgrade intensifies investor worry about US fiscal path
“The ratings agency cut America’s pristine sovereign credit rating by one notch on Friday, the last of the major ratings agencies to downgrade the country, citing concerns about the nation’s growing $36 trillion debt pile.“
Visual Capitalist – Charting U.S. Trade Relationships
“A country’s largest trading partners can impact its economic stability, currency value and business opportunities, influencing investor confidence and market performance.“
What we think
Last week we said that “The Rand managed to gain a further 25 cents against the US Dollar, despite a continued climb in the Dollar Index. This strength in the Rand is largely attributed to a shift in market sentiment toward a more risk-seeking environment.”
After the Dollar index lost some ground throughout last week, global risk-on sentiment as well as local factors driving rand gains will likely carry further gains through the week.
Later this week we receive the highly anticipated “budget 3.0” after the previous two versions could not be implemented due to differences on tax issues within the GNU. On Wednesday, Godongwana will present the third iteration of the budget and hopefully provide clarity on the inflation target which is expected to change from a 3-6% range to a 3% single point target.
Globally, we look forward to inflation figures from the UK and Japan while it seems to be a quiet week in terms of US data. We expect local factors to drive trading this week.
Our Range for the week: 17.70 – 18.20.
Have a great week ahead.