FX Monthly Chart Book
- The rand has traded in a range of R14.61/$ to R15.57/$ during March, fluctuating along with global sentiment about the pace of the global vaccine rollout and US economic growth in particular. Better global economic and financial conditions have seen the rand strengthen by 1.7% in March; the rand also gained most against the dollar amongst emerging market currencies in March.
- The rand continues to be supported by robust terms of trade. This might retreat somewhat in the medium term, which should lead to modest rand depreciation. The depreciation, however, is not likely to be material and will thus unlikely become inflationary. The rand is expected to end the year at R15.00/$ and R15.27/$ in 2022.
- A reasonably resilient rand should aid in keeping inflation contained this year despite upside pressure from food and fuel inflation. This, in turn, should delay the expected monetary tightening cycle. We see a gradual rate hiking cycle from next year with two 25 bps rate hikes penciled in for 2022.