When I posted my last idea on the USDZAR pair, the pair was trading just above the 200-week MA. The rand has managed to break below this level, currently at 17.74, and pull the pair all the way down to the 2024 low of 17.08. The rand however bounced hard off this support at 17.08 due to risk-on sentiment dampening after Trump’s 100% China tariff threat last week.
The question now is whether my original idea calling for a move towards 16.62 is still on the cards. Currently the biggest positive factors which are rand positive is of course the rally we are seeing in precious metal prices as well as the broad-based weaker dollar.
The negative factors however do seem to be heavier than the positives. The yield differential between the ZA 10-year and the US 10-year has remained steady but levels below 5% does seem like a tough nut to crack particularly due to the low levels of dovishness from the Federal reserve. Additionally, the most recent data published from the SARB on the SA current account does not make for good reading for the rand. The deficit on the SA current account widened to R82.8 billion in 2Q2025, up from R47.8 billion in 1Q2025. Similarly, the SA trade surplus declined from R211 billion in 1Q2025 to R177 billion in 2Q2025. The rise in precious metal prices will hopefully assist in reducing the current account deficit and increase the trade surplus in the 3Q2025 but as it stands now the latest data is not supportive of continued rand strength.
To conclude I’m not writing off the original idea calling for a move into the range between 16.40 and 16.60 but I do not expect the rand to maintain those levels for a sustained period of time. I would recommend to my fellow South Africans to utilise the strong rand levels anywhere below 17.00 and diversify into dollar denominated assets. It has been a strong year for SA inc. but the long-term trend of low economic growth for the country has not changed.
The question now is whether my original idea calling for a move towards 16.62 is still on the cards. Currently the biggest positive factors which are rand positive is of course the rally we are seeing in precious metal prices as well as the broad-based weaker dollar.
The negative factors however do seem to be heavier than the positives. The yield differential between the ZA 10-year and the US 10-year has remained steady but levels below 5% does seem like a tough nut to crack particularly due to the low levels of dovishness from the Federal reserve. Additionally, the most recent data published from the SARB on the SA current account does not make for good reading for the rand. The deficit on the SA current account widened to R82.8 billion in 2Q2025, up from R47.8 billion in 1Q2025. Similarly, the SA trade surplus declined from R211 billion in 1Q2025 to R177 billion in 2Q2025. The rise in precious metal prices will hopefully assist in reducing the current account deficit and increase the trade surplus in the 3Q2025 but as it stands now the latest data is not supportive of continued rand strength.
To conclude I’m not writing off the original idea calling for a move into the range between 16.40 and 16.60 but I do not expect the rand to maintain those levels for a sustained period of time. I would recommend to my fellow South Africans to utilise the strong rand levels anywhere below 17.00 and diversify into dollar denominated assets. It has been a strong year for SA inc. but the long-term trend of low economic growth for the country has not changed.
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The 50-day MA at 17.45 is holding resistance. Short is still on.Ghi chú
The rand managed to pull the USDZAR pair to another fresh yearly low yesterday following the 25bps Fed rate cut. The dollar saw losses across the board which allowed the ZAR to pounce.The original idea calling for a move into the support range between 16.35 and 16.65 is still holding validity but the ZARs momentum does seem to be fading.
The positive factors for the Rand (Credit rating upgrade on Government debt, smaller Government budget deficit than expected ,SARB updated inflation target, strong gold and precious metal prices coupled with trade surplus plus broad based weaker dollar) are all priced in and a fresh catalyst will be needed for a push below the 16.50 handle for the pair. It may almost be time to load up on USD for ZAR holders, anything below 16.75 do seem like very attractive rates.
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