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Corporate and Investment Bank
Standard Bank Group
South Africa FX 02 July 2021

FX Monthly Chart Book

Shireen Darmalingam

  • The rand started off on a strengthening bias in June, with the still strong terms of trade providing significant support. The rand, however, has weakened over the past few days following the news of the Fed’s expectations for rate hikes being brought forward as well as the SA implementation of further lockdown restrictions to Level 4. It traded in a range of R13.41/$ to R14.37/$ in June and weakened by 4% against the USD and by 0.9% against the EUR.
  • We view the rand as fairly valued given the current domestic and global fundamentals.
  • We still see further upside risk to the consensus growth, trade and fiscal forecasts, which in turn should be positive for the rand. However, this will likely be counteracted by the weakening of the terms of trade that we foresee.
  • We see the rand ending the year at R14,30/$, and averaging R14,38/$.

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