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South Africa FX 05 October 2021

FX Monthly Chart Book

Shireen Darmalingam

  • The rand has weakened in recent days on the back of fragile global risk appetite and following strength mid-month. It lost 4.7% against the dollar in September and was 2.5% and 2.4% weaker against the euro and pound respectively. The rand traded in a range of R14.06/$ to R15.25/$ in September.
  • The recent weakness in the currency comes on the back of persistent global risks and in line with other emerging market currencies. Risk-off appetite has been driven by higher inflation expectations, expectations of tighter monetary policy across the globe and weaker economic growth.
  • Local risk events, such as the tabling of the Medium-Term Budget Policy Statement, the local elections in November as well as the final MPC meeting in November, could see the rand remaining volatile in Q4:21.
  • We see the rand ending the year at R14,70/$ and averaging R14,61/$.

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