March 04, 2025
MyCURRENCY News | Week 9 2025
What we know
As we enter the third month of 2025 (already), last week saw muted Rand movement – right up until Friday, when it dramatically weakened, resulting in a 30-cent range on the day.
Friday’s aggressive move stemmed from a tense visit to the White House by Ukrainian President Volodymyr Zelensky. As always with discussions of war, we remain on a knife’s edge, waiting to see whether a peaceful resolution can be reached – especially with Trump temporarily suspending military aid to Ukraine.
Looking at economic releases, weak local inflation figures, combined with robust earnings data from the US, did not support the Rand’s fundamental outlook. This outlook appears even less favourable following a statement co-signed by President Ramaphosa last week, addressing actions taken by President Trump. This firm stance, which feels unusual for the South African government, now sets the stage for severe US sanctions in retaliation.
What others say
Business Tech – Very serious threat to South Africa
“President Cyril Ramaphosa’s attack on the United States can have severe consequences for South Africa, including sanctions against Americans holding South African government debt.”
Time – Trump Orders ‘Pause’ on U.S. Aid to Ukraine After Oval Office Clash With Zelensky
“The order will remain in effect until Trump determines that Ukraine has demonstrated a commitment to peace negotiations with Russia.”
Reuters – China hits US agriculture, says won’t be bullied by fresh Trump tariffs
“China’s foreign ministry said the country has never succumbed to bullying or coercion, and that trying to exert extreme pressure on China is a miscalculation and a mistake.”
What we think
Last week we said that “The 18.40 level, where the ZAR/USD opened this morning, seem[s] unsustainable. At the moment, it feels like we are in a “too good to be true” scenario, awaiting the anticipated weakening.”
As feared, the Rand was unable to maintain its surprising strength, as a sneeze from the US led to a cold that cost the Rand 30 cents against the dollar. While Ukraine and the US are in a deadlock, we can expect further Rand volatility.
In the week ahead, the European Central Bank faces a decision on interest rates and is expected to lower them by another 25 basis points following cuts in December and January. European inflation data, released yesterday, aligned with expectations and showed no warning signs regarding the rate-cutting cycle. Given the US’s decision to reduce aid to Ukraine, the potential impact of additional spending by the UK and EU on this issue remains to be seen.
On Friday, the US release their employment figures in the form of Non-Farm Payrolls. Coming from a relatively low base in the prior year, a miss on the 153k target could lead to some Dollar weakness. Furthermore, we suspect that the negative USD impact of a miss to the downside, would likely be greater than the size of USD gains, should this print better than expected.
Our range for the week: 18.50– 18.90.
Have a great week ahead.