The market currently shows a bearish bias for the AUD to ZAR exchange rate.
Key drivers include an interest rate differential where Australia's Reserve Bank is expected to raise rates, contrasting with South Africa's central bank cutting rates to 6.75%, likely leading to a weaker rand. A cautious economic outlook for South Africa, with projected GDP growth at 1.4% as infrastructure improves, supports the rand's potential. In contrast, Australia faces domestic concerns over security, which may dampen sentiment.
In the near term, the exchange rate is expected to trade within a stable range, having recently reached lows near 11.05, showing a decline from its 3-month average.
Upside risks include significant recovery in global commodity prices, which could support the AUD. Downside risks could stem from worsening economic conditions in Australia or geopolitical tensions that increase demand for safe-haven currencies like the USD.