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Standard Bank Group
South Africa FX 03 July 2025

FX Monthly Chart Book

Shireen Darmalingam

  • The rand had yet another volatile trading month in June. However, it ended the month stronger, at R17.63/$, compared to R18.00 at the end of May. This translates into a gain of 1.6% in June. The rand, however, was weaker against the euro, losing 2%, and 0.3% weaker against the pound. It traded in a wide range of R17.57/$ – R18.16/$. Emerging market currencies staged a mixed performance against the dollar: the BRL, HUF, CZK, PLN and BGN were the best-performing EM currencies; the TRY, ARS, RUB, PHP, and INR were amongst the worst-performing EM currencies.
  • The rand’s strength in June was buoyed by a confluence of global and domestic factors. The rand’s rally in June can be partly attributed to a weaker US dollar in the month. The dollar came under pressure on the back of economic volatility and ambiguity surrounding US President Trump’s trade policy. President Trump this week indicated that his 9 July tariff deadline for higher tariffs to resume will remain intact. He has also renewed his threat to cut off talks with several countries should they not adhere to his terms and conditions. South Africa is among several countries that are looking for extensions to the tariff waiver period to allow for further discussions.
  • The rand was also once again affected by domestic factors in June. SARB Governor Lesetja Kganyago has been arguing that the current inflation target rate of 4.5% (the mid-point of the 3-6% range) is hurting the currency and is allowing prices to increase. He cited that it causes prices to double every 16 years. Kganyago is advocating for a change in the inflation target to 3%. Kganyago noted that “the main concern with South African inflation is not our ability to hit the target”; rather “that it is high compared to other countries”. The rand gained ground towards the end of June on indications that a decision may be reached imminently. A joint SARB and National Treasury team is expected to provide a review of its technical work and will present its recommendations soon. However, the rand could come under renewed pressure should the situation within the Government of National Unity (GNU) escalate.
  • We see the rand averaging R18.06/$, R20.45/€, and R24.03/£ in 2025.
 

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