February 05, 2025
MyCURRENCY News | Week 5 2025
What we know
Last week, the market contained itself within an established range of R18.39 – R18.86 to the Dollar. However, signs of a weaker Rand and stronger USD were evident early in the week, as the market was already trading at the week’s high by Monday going into Tuesday.
Market participants were hyper-focused on global interest rate decisions last week, and all releases came out in-line with forecasts. The FED held US interest rates constant at 4.5%, while the SARB cut our repo rate by 0.25% (from 7.5% to 7.25%), which contributed to the weaker Rand.
Aside from this, the European Central Bank and Bank of Canada both cut their respective interest rates by 0.25%. Expectedly, interest differentials increasing in favour of the USD caused the Dollar to rally, as shown by the Dollar Index trading 1.5% stronger throughout last week.
And just as we were singing our government’s (and state-owned enterprise’s) praises for remaining quiet amid a noisy geopolitical climate, Cyril decided to sign a bill allowing land seizures without compensation, and a week later, energy reserves fell to levels that required Eskom to implement brief power cuts, causing local sentiment to dwindle and the Rand to weaken as a result.
What others say
Reuters – Stocks, dollar on a rollercoaster as China hits back at US tariffs
“An additional 10% U.S. tariff on Chinese exports took effect at 0501 GMT, and minutes later Beijing announced it was investigating Google and imposing tariffs on imports of U.S. oil, coal, gas, cars and farm equipment from Feb. 10.”
Moneyweb – Expropriation Act: Landowners are still ‘substantially’ protected
“Besides setting out in quite a detailed fashion how expropriations are to take place, the act also provides an outline regarding how compensation is to be determined.”
Daily Maverick – SA mining sector paid almost 50% less taxes in 2024 as commodity prices soured
“The picture is quite clear – the mining sector is paying less to the Treasury at a time when the Treasury needs every cent it can lay its hands on.”
What we think
Last week we said… “Despite the Rand’s mini bull-run last week, the Dollar remains strong compared to its levels before weakening in December. As the ZAR.USD trading resumed this week, the market gapped up to open at a level seven cents higher than last week’s close.”
The market had its first taste of what a Trump term may look like going forward. A significant knee-jerk reaction occurred overnight on Sunday due to Trump’s comments about suspending aid to South Africa, causing the Rand to gap higher and open this week’s trading at R18.90 to the Dollar.
Although, at the time of writing, the Rand has recovered its losses from Sunday evening, local sentiment took a dive last week, and any strong USD news will likely continue to push the USD stronger against the Rand.
Non-farm payrolls and accompanying unemployment data will be released this Friday, providing insight into the health of the labour market, with softer figures potentially leading the FED to cut interest rates more than anticipated this year.
Aside from US employment data, employment figures will also be released from New Zealand and Canada, along with a forecasted 0.25% interest rate cut by the Bank of England.
Our range for the week: R18.55 – R19.20.
Have a great week ahead.