Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
Equities link-chevron Created with Sketch.
Analysts
Analysts
Help and Support
Help and Support
South Africa FX 05 August 2025

FX Monthly Chart Book

Shireen Darmalingam

  • The rand had yet another volatile trading month in July, ending the month weaker, at R18.19/$, from R17.72/$ in June. This translates into a loss of 2.6% for July. However, it was stronger against both the euro and the pound, gaining 0.3% and 1.0% respectively. It traded in a wide range of R17.48/$ – R18.19/$. Emerging market currencies lost ground against the dollar in July: the ARS, CLP, PLN, PHP and BRL were amongst the worst-performing EM currencies.
  • The rand’s weakness was driven by both global and domestic factors. Its weakness can be attributed partly to the turmoil around the trade war as SA awaited its fate around the proposed tariffs by the Trump administration. President Trump has since confirmed that SA will face 30% tariffs, effective as of Thursday. However, we still see a chance that SA may reach a trade deal with the US, with these tariffs likely trimmed to, say, 15%. The terms of trade – a key input in our fair-value model – recently turned slightly less supportive, an apt reminder of the global risks to the domestic inflation, interest rate and exchange rate trajectories.
  • The SARB announced that it would be targeting the lower end of the 3-6% inflation target. The SARB noted at the July MPC meeting the existing inflation target of 3-6% as ‘too high and wide’. With a 3% inflation target, core inflation is expected to remain close to 3% despite headline inflation rising in the near term. The bank will be using forecasts with a 3% inflation anchor at future meetings. The SARB will continue liaising with National Treasury (NT) to achieve permanently lower inflation. The governor reiterated that it is the central bank’s mandate to deliver price stability. However, the NT noted that it alone holds the authority to set policy, albeit in consultation with the SARB. The NT remarked that it would communicate any policy changes with regard to the inflation target by way of the official channels. It stressed that it has not signed off on any changes to the inflation target. We still expect the NT to lower the inflation target, albeit not quite yet. It is possible that the NT will wait until the MTBPS later this year, or until the tabling of the Budget next year, to announce changes.
  • We see the rand averaging R18.15/$, R20.57/€ and R24.08/£ in 2025.
 

Read PDF