ZAR/USD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average and lacks a strong driver.
Key drivers:
• Rate gap: The South African Reserve Bank is expected to cut interest rates soon, while the Federal Reserve is also planning further reductions, which may keep pressure on the USD.
• Commodities: The South African rand has strengthened with rising prices for precious metals, influencing investor interest.
• Inflation: South Africa’s inflation is currently low and below target, enhancing local economic stability.
Range: Expect ZAR/USD to stay within its recent range, holding above average but not testing extremes.
What could change it:
• Upside risk: A significant increase in global commodity prices could further strengthen the rand.
• Downside risk: Heightened geopolitical tensions involving the US could lead to increased volatility in the dollar.