The South African rand demonstrated significant strength this past week, largely influenced by international factors and global market sentiments. The rise in tensions between Israel and Iran, particularly expectations of Iranian retaliation against Israeli airstrikes, initially heightened market concerns. However, these fears subsided later in the week when Iranian officials clarified that no such retaliation would occur, stabilising “risk-off” sentiments. As a result, traditional safe-haven assets like gold and the US Dollar experienced mostly sideways trading.
Monetary policy review
Locally, several key developments also played a crucial role in bolstering the ZAR’s performance. Notably, South Africa’s producer inflation (PPI) exceeded expectations in the latter part of the week. Furthermore, during its monetary policy review on Friday, the South African Reserve Bank (SARB) emphasised its commitment to controlling inflation by maintaining higher interest rates for an extended period. Adding to the positive momentum was the announcement from Eskom’s CEO that there would be no load shedding above stage five this winter.
Looking ahead, international market dynamics are expected to continue significantly influencing the South African rand. Investors will be particularly attentive to the US Federal Reserve’s monetary policy updates, which are scheduled for announcement at a press conference on Wednesday. These updates are likely to provide further direction for the USD and, consequently, impact the rand.
Upcoming market events
Wednesday, 1 May
- GBP: Manufacturing PMI
- USD: Manufacturing PMI
- USD: JOLTs job openings
- USD: Fed interest rate decision
- USD: Fed Press Conference
Thursday, 2 May
- ZAR: Manufacturing PMI
- USD: Initial jobless claims
Friday, 3 May
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