USD/ZAR Outlook:
Bearish, as the rate is currently below its recent average and near recent lows.
Key drivers:
• Rate gap: The US Federal Reserve's decision to hold interest rates steady contrasts with the high interest rates maintained by the South African Reserve Bank, putting pressure on the USD.
• Risk/commodities: A rising oil price supports the ZAR, as South Africa is a commodity exporter, benefiting from strong global demand.
• One macro factor: Increased confidence in the rand is bolstered by the South African government's efforts to reduce the budget deficit, attracting investors.
Range:
Expect the USD/ZAR to hold within its recent range, fluctuating but not testing extremes significantly.
What could change it:
• Upside risk: An unexpected increase in US economic data could bolster the USD.
• Downside risk: Any further easing of global geopolitical tensions could weaken the dollar and support the ZAR.
