The South African rand appreciated sharply towards 16.2 per USD, the highest since June 28th, after a softer-than-expected US inflation report eased concerns that the Federal Reserve will continue to hike interest rates aggressively, pulling down the dollar. Still, fundamentals hold as the currency is very sensitive to shifts in global market sentiment and the country battles with prolonged worker strikes, rolling blackouts and flood damages in addition to growing global recession fears. The South African Reserve Bank raised the key repo rate by more than expected 75 bps at its July 22nd meeting and signalled further aggressive monetary tightening ahead to tame the surging domestic inflation. Inflation topped 7.4% in June, the highest since May of 2009. Meanwhile, the government is cutting fuel pump prices in an attempt to ease pressure on household finances and cool inflation.
Historically, the South African Rand reached an all time high of 19.35 in April of 2020. South African Rand - data, forecasts, historical chart - was last updated on August of 2022.
The South African Rand is expected to trade at 17.18 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 18.49 in 12 months time.