February 24, 2025
MyCURRENCY News | Week 8 2025
What we know
Last week was a historic one for South Africa, as Finance Minister Godongwana announced – on the very day we expected to hear what lies ahead for the new financial year – that the budget speech would be postponed for the first time since 1994. The market reacted as expected, with heightened volatility.
Although the delay in the budget speech could be seen as a warning sign, market participants had mixed reactions to the news. The announcement was preceded by substantial weakening in the Rand, followed by a recovery that began on Wednesday and extended into the rest of the week.
Eskom also faced multiple breakdowns last week, leading to sudden and severe loadshedding over the weekend. The country is currently at Stage 6, which may be reduced once power plants are operational again.
Shifting to international news, it was a relatively quiet week for U.S. economic data. However, the U.K. released inflation and unemployment figures, which held little surprise. The biggest global headline came from President Trump’s address at the Conservative Political Action Conference, where he seems to be maintaining his stance on key policy issues. Meanwhile, Elon Musk reportedly warned federal employees to justify their work over the past week or risk being fired.
What others say
Business Tech – Why stage 6 load shedding is back
“Electricity Minister Kgosientsho Ramokgopa says that Eskom has been hit by another ‘perfect storm’ of breakdowns and capacity being offline.”
Reuters – Germany’s Merz faces tricky talks with potential coalition ally
“Merz, who has no previous experience in office, is set to take charge with Europe’s largest economy ailing, its society split over migration and its security caught between a confrontational U.S. and an assertive Russia and China.”
BBC – Key US agencies tell staff not to answer Musk email on what they did last week
“Employees were asked to respond explaining their accomplishments from the past week in five bullet points – without disclosing classified information.”
Moneyweb – South Africa could be off the FATF grey list by October
“Global anti-money laundering watchdog notes the country’s progress.”
What we think
Last week we said that “We look forward to hearing a response from the SA government regarding the reduction of aid to South Africa, and a potential strategy going forward.”
As we were holding our breath for some kind of strategy, it now appears that we will have to wait a bit longer – until 12 March – to see how the government plans to address this reduction and its potential impact on the South African Economy.
This ‘extension’ could bolster faith in the Government of National Unity (GNU), showing that they are dedicated to rigorous financial planning and ensuring the best outcome for the country and its people. It is not the first time that the GNU have struggled to agree and could also be the start of a longer lasting string of disagreements over various points of order under the coalition government.
Even if the Rand’s strength stems from this optimism, there are numerous factors that should, in theory, lead to weakness – making the 18.40 level, where the ZAR/USD opened this morning, seem unsustainable. At the moment, it feels like we are in a “too good to be true” scenario, awaiting the anticipated weakening.
Looking ahead, it’s a relatively quiet week for data releases. However, we do have the local inflation report on Wednesday, followed by U.S. inflation data on Friday.
Despite current trading levels, we do not believe this strength is sustainable in the short term.
Based on this outlook, our projected range for the week is 18.50 – 18.80.
Have a great week ahead.