August 04, 2025
MyCURRENCY News | Week 31 2025
What we know
Last week, the Rand weakened against the Dollar to levels not seen since May this year. Its decline was due to both domestic and international pressures. USD.ZAR began the week at 17.70, and by Thursday the Rand had fallen by more than 3 percent, reaching 18.35. On Friday, it recovered a significant portion of its weekly losses, and the currency pair ended the week at 18.03.
Domestically, the Repo rate was reduced by 25 basis points to 7.00%, making the Rand less attractive to investors. On the other hand, the FED kept US interest rates steady at 4.5%; despite the continuous pressure from President Donald Trump to lower borrowing costs.
Trump became very vocal about lowering interest rates, believing this would maximise the benefits of the tariff policy by increasing domestic expenditure. Jerome Powell stated that they wanted to monitor the economy’s response to the tariffs and to better understand their effect on inflation. Tensions between the two leaders persist. Investors are speculating that a rate cut may come in September.
The US GDP advanced estimate revealed a growth rate of 3%, which surpassed the expectation by 0.5%. As a result, we saw the dollar index push through the 100 level on Thursday for the first time since May. However, the dollar was humbled on Friday as non-farm payrolls came in much lower than expected. The dollar index closed off the volatile week at 98.7.
What others say
CNN – Trump just revealed his new tariff plan. Here’s what you need to know
“President Donald Trump just set new tariffs for every country around the world, solidifying his extreme break with America’s long-standing trade policy.“
LiveNOW – Fed leaves interest rates unchanged despite Trump demands
“The Federal Reserve voted to leave its short-term interest rate unchanged on Wednesday for the fifth straight meeting as expected, despite mounting pressure from President Donald Trump to lower them and dissent from two Fed governors appointed by Trump.“
IOL – SA Reserve Bank rate cut offers relief to consumers
“Frank Blackmore, Lead economist at KPMG said that that the repo rate was reduced because the stronger rand helped moderate inflationary pressures.“
What we think
Last week, we said that “Importantly, we also need to remain alert to any headlines regarding trade and tariff agreements between ourselves and the US. As the 1 August deadline comes into view, any negative outcome could throw a spanner in the works of our relatively bullish ZAR outlook.”
On Thursday, President Trump signed an executive order imposing reciprocal tariffs on over 60 countries, effective from 7 August. As the United States is South Africa’s third-largest trading partner, the resilience of our culture and work ethic will be pivotal in helping the economy regain momentum as it adapts to the necessary adjustments ahead. As a famous South African once said, “Hulle weet nie wat ons weet nie!”
As the global economy braces for the impact of the tariffs in the week ahead, a more risk-off sentiment is expected. In addition, South Africa has received the highest tariff rate of 30% among Sub-Saharan African countries, which could place prolonged strain on the already fragile Rand.
In the week ahead, investors are expecting the Bank of England to cut interest rates by 25 basis points to 4% and the US will be announcing ISM Services PMI data for July.
Our range for the week is 18.00 – 18.50.
Have a great week ahead.