ZAR/USD Outlook:
Slightly positive, but likely to move sideways, as the rate remains above its recent average without a strong single driver.
Key drivers:
- Rate gap: The South African Reserve Bank maintains higher interest rates compared to the US Federal Reserve's recent pause, supporting a stronger rand.
- Risk/commodities: Strong global demand for South Africa’s key exports, such as gold and platinum, is boosting the rand's strength.
- Macro factor: Recent government policies aimed at reducing the budget deficit and enhancing efficiency are improving investor confidence in South Africa.
Range:
The ZAR/USD is likely to hold within its recent range despite current strength, without clear trends driving either direction.
What could change it:
- Upside risk: A notable improvement in US economic data could reinforce USD strength.
- Downside risk: Any shifts in global commodity prices or renewed geopolitical tensions could negatively impact the rand.
