Rand Strengthens Amid Weaker Dollar and Rising Precious Metals Prices

The rand saw a modest appreciation toward R18.45 on Thursday, supported by a weaker dollar and rising costs for precious metals, particularly gold. Reduced expectations for further interest rate cuts also provided a boost. The South African Reserve Bank lowered its repo rate by 25 basis points for the third consecutive time, while inflation remained well within the bank’s target range of 3% to 6%. Despite this, Governor Lesetja Kganyago warned of an uncertain medium-term outlook, citing potential global risks, including trade tensions under US President Donald Trump’s administration. The central bank expects inflation to stay below 4.50% in the first half of the year, with an average of 3.90% in 2025—slightly below its previous 4% forecast. Meanwhile, the bank revised its 2025 GDP growth projection upward to 1.80% from 1.70%, while keeping its estimates for 2026 and 2027 unchanged at 1.80% and 2%, respectively.

Wall Street closed higher after a volatile session, as investors weighed mixed earnings reports while expectations for the Federal Reserve’s policy stance remained largely unchanged following the release of key economic data. The Nasdaq and Dow Jones each gained 0.50%, while the S&P 500 rose 0.60%. According to Trading Economics, Meta (NASDAQ:META) climbed 1.60% after exceeding earnings expectations and announcing a bold investment in open-source AI, while Tesla (NASDAQ:TSLA) surged 2.90% despite falling short of forecasts in its earnings call. In contrast, Microsoft (NASDAQ:MSFT) fell more than 6.20% after issuing a disappointing revenue forecast, raising doubts about its heavy investment in Azure. Apple (NASDAQ:AAPL) dipped slightly ahead of its earnings release later in the day. On the economic front, preliminary data showed that the US economy grew at an annualised rate of 2.30% in the fourth quarter, missing the projected 2.60% expansion.

European stocks rose on Thursday, with the STOXX 50 adding 1%, while the STOXX 600 gained 0.90% after the European Central Bank cut its key deposit rate by 25 basis points, in line with expectations, and indicated the possibility of further reductions. Officials noted that the disinflation trend is progressing as anticipated and that monetary policy remains restrictive. They also reaffirmed their commitment to a data-dependent, meeting-by-meeting strategy for future policy decisions. The euro traded at $1.04, its weakest level in over a week.
With investors turning to gold as a safe haven due to increased US tariff concerns, gold prices reached a record high on Thursday and logged the best month since March 2024. Investors were hoping for further guidance from a key inflation report that was due later in the day. By 18h00 local time, spot gold had risen steadily, trading steadily at $2 794.61/oz. Similarly, US gold futures increased by 0.20% to trade at $2 826.90.

Oil prices were little changed as markets braced for Trump's threatened tariffs on Mexico and Canada, the two major crude oil suppliers to the US, and an Opec+ producers’ meeting. Brent crude futures were down 0.10%, at $76.51 a barrel at 18h15 local time, US crude futures were barely changed, trading at $72.64.



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