Recent forecasts and market updates indicate a mixed outlook for the New Zealand dollar (NZD) against the South African rand (ZAR). The NZD has shown fluctuations, recently influenced by disappointing domestic card spending figures, although it managed to rebound amidst an improvement in global risk sentiment. The latest manufacturing PMI figures could provide further support for the NZD in the near term.
Several economic indicators are currently affecting the NZD's trajectory. The unemployment rate has risen to 5.3%, the highest level since 2016, reflecting challenges in the labor market. Additionally, a surprising 50 basis point cut by the Reserve Bank of New Zealand (RBNZ) to 2.5% indicates significant concerns over economic growth, following a bigger-than-expected contraction of 0.9% in Q2 2025. While inflation has reached 3%, marking the upper limit of the RBNZ's target, the overall economic indicators suggest a cautious outlook for the NZD.
The ZAR is also experiencing pressure, influenced by various upcoming economic data releases. Recently, the rand weakened slightly to 17.16 against the US dollar ahead of South Africa’s unemployment data and manufacturing figures, with expectations of a modest decrease in output and employment in export sectors due to global demand challenges. Nonetheless, the ZAR has benefitted from investor confidence following South Africa's recent exit from the global financial crime 'grey list'. This exit has bolstered the country’s financial credibility and attracted interest from global investors.
Price data shows that the NZD/ZAR is currently trading at 9.7050, which is approximately 3.8% below its three-month average of 10.09, having fluctuated in a volatile range from 9.6432 to 10.44. The ZAR's performance is also sensitive to trends in the oil market, as noted in the recent oil price movements, where oil is trading at $64.29, around 2.1% below its three-month average, traversing a significant range from $60.96 to $70.13. These oil price trends may further influence the ZAR, as fluctuations in oil prices can impact South Africa's export revenues and overall economic stability.
In summary, both the NZD and ZAR face challenges from domestic economic conditions and external market forces. Analysts suggest that the interplay between these factors will be critical in determining the direction of the NZD/ZAR exchange rate in the coming weeks.
