The current market bias for the ZAR to USD exchange rate is bearish.
Key drivers include a widening interest rate differential, as the South African Reserve Bank has eased rates while the Federal Reserve is expected to cut rates further, which typically weakens the currency. Additionally, South Africa’s economy is projected to experience modest growth, bolstered by better electricity supply and infrastructure improvements. In contrast, the U.S. dollar may weaken due to anticipated monetary policy adjustments and slowing global growth, particularly affecting investor sentiment.
The near-term range for the ZAR against the USD shows potential fluctuations, moving within a stable range based on recent price data.
An upside risk could come from stronger-than-expected economic performance in South Africa, while a downside risk may arise from further aggressive rate cuts by the Federal Reserve, leading to greater dollar weakness.
