Another week, another round of ‘what now?’ for the Rand from Monday’s surprise policy backflip to Friday’s quiet finish, the ZAR managed to hold its ground—but not without a few jolts and jollies along the way.
Let’s break it down, day by day…
Market Pulse
- Price Action: R18.42-18.08 range, with an average daily move of 19 cents
- Technical Setup: Support R18.15, 18.08, resistance R18.34, 18.42
- Momentum: Rand losing momentum, weakness bias
Key Moments (5-9 May 2025)
Some of the more critical factors affecting price action this week:
- Fed Holds, BoE cuts: The Federal Reserve kept interest rates on hold while the Bank of England cut theirs.
- PMI Back to 50.0: The S&P Global PMI prints exactly 50.0 for April, signalling neither growth nor contraction. Not dead, not dancing.
- Manufacturing Still Moping: March output slides 0.8% YoY, and 2.2% MoM
- Foreign Reserves Up: April foreign reserves climb to $64.3bn.
- Global Jitters Eased by Trade Moves: Trump-Starmer tariff cuts, China’s RRR slash, and BoE’s rate cut all send ripple effects across EMs. including the Rand.
The Rand kicked off the week at R18.39/$, treading cautiously as traders eyed the horizon and then got the impetus it needed, with confirmation that the Treasury, bowing to political pressure, had ditched the proposed VAT hike, keeping it steady at 15%.
Markets cheered the unexpected policy U-turn and the Rand responded with a rally, dipping to R18.23/$ before settling at R18.27/$ by day’s end.
Tuesday saw the Rand opening at R18.27/$, navigating through mixed signals. The S&P Global PMI for April landed squarely at 50.0—neither expansion nor contraction.
A flatline that left traders shrugging as the currency meandered, touching a low of R18.14/$, and closed at R18.21/$.
Midweek, the Rand began at R18.21/$, bracing against headwinds, as March’s manufacturing data revealed a 0.8% YoY decline, a sobering statistic. However, the unveiling of Phase 2 of Operation Vulindlela offered a glimmer of hope, aiming to unblock economic bottlenecks.
Across the Atlantic, the Federal Reserve held interest rates steady at 4.25%-4.50%, citing rising risks of inflation and unemployment amid tariff-induced uncertainties.
The Rand wobbled, hitting a low of R18.17/$ and a high of R18.35/$, before closing the day at R18.27/$.
And in other news
US–UK Trade Deal - First Strategic Reset
The US and UK announced a new trade agreement aimed at reducing tariffs and enhancing economic cooperation, in what is expected to be the first of many such deals that are likely to reset international trade.
Putin–Zelensky Meeting - A Step Toward Lasting Peace
Ukrainian President Zelensky and Russian President Putin are scheduled for direct talks in Istanbul on May 15, 2025, contingent upon the initiation of a full ceasefire. This proposed meeting, potentially the first face-to-face encounter between the two leaders since the onset of the conflict, is seen as a critical opportunity to negotiate lasting peace. With this coinciding with Trump’s visit to the Middle East, it would not be a surprise if he adds a (planned) impromptu stop to his agenda.
India–Pakistan Ceasefire: A Fragile Truce Amidst Tensions
India and Pakistan agreed to a "full and immediate ceasefire" following a sharp escalation in hostilities triggered by a deadly militant attack in Indian-administered Kashmir, with the US playing a pivotal role in brokering the ceasefire, with Trump announcing the agreement after extensive talks mediated by U.S. officials.
Bitcoin breaks above $100,000
Bitcoin’s rise continued as it broke back above R100,000 with all indications that the crypto market is in its next bull run, with our analysis showing some interesting forecasts for the coming weeks and months.
Getting back to the Rand
Opening on Thursday at R18.27/$, the Rand continued to be resilient to global developments, with the announcement of a US–UK trade pact and China’s liquidity injections via RRR cuts providing a mixed backdrop.
The Rand fluctuated between a low of R18.08/$ and a high of R18.35/$, ultimately closing at R18.20/$.
Friday saw the Rand open at R18.21/$, with the Bank of England’s rate cut to 4.25% and Bitcoin surpassing R100k influencing market sentiment. Despite these global cues, the Rand maintained stability, trading between R18.15/$ and R18.31/$, and closing the week under R18.20/$.
Overall, not too shabby a performance!
Volatility & Risk Analysis
Much-reduced volatility, but still nothing to scoff at:
- Average Daily Range: 18.9c or 1.0% (equating to a potential profit or loss of R10,000 every day for every R1 million exposure)
- Weekly Range (total fluctuation): 34c or 1.9% (equating to a possible saving or loss of R19,000 for every R1 million exposure)
Once again, the rand has managed to outperform, but this is not the time to be complacent if you are on the import side of the market, which is something we tend to do when things have gone our way for some time.
Because things can change quickly, and when they do, you are left with the anguish and regret of not having taken action when you should have.
The Week Ahead
The week has already started with a bang, with news that the US and China have likely reached a trade deal and put a pause on current extra tariffs while this is being worked out, which is a biggie!
And the news that the first contingent of South Africans had arrived after getting refugee status, with the US Embassy updating their website with details in this regard.
This week is expected to be a historic one on the geopolitical scene, with Trump heading to Saudi Arabia, meeting with Syria, then visiting Qatar (a first for a US President) and UAE to try and secure peace in the region and what are the odds he heads to Turkey to join Putin and Zelensky?
Another fascinating week.