The Rand has weakened in response to a turn higher in the U.S. Dollar that has pushed it beneath key levels of support on the charts and cultivated risk of further losses in the process, some of which could potentially lift GBP/ZAR back to 20.82 or above over coming days.
The Rand was steady but languishing near to three-month lows ahead of the weekend after the South African Reserve Bank (SARB) pushed back the likely timing of any post-crisis interest rate rise, leading economists at Investec and Goldman Sachs to suggest it could be 2022 at the earliest before borrowing costs go up.
The Rand has begun to find its feet with the dust settling on recent unrest in South Africa, although its resilience is being further tested by an advancing Dollar, which has lifted USD/ZAR back toward pivotal levels ahead of Thursday’s South African Reserve Bank (SARB) policy decision.
The Rand has been cushioned by a cluster of major technical support levels on the charts but with civil unrest disrupting South African society and further stalling its economic engines, the outlook for USD/ZAR and other Rand exchange rates hangs in the balance.
Public disturbances, rising Covid-19 cases and a softer global investment backdrop all conspired to push the South African Rand lower at the start of the new week, however some analysts maintain that the outlook remains constructive for ZAR.
The South African Rand is entering a time of the year that is traditionally associated with weakness, however some analysts are saying that following a month of losses the prospects for a rebound are growing.
The Rand could be set to hold onto much of this year's gains over international counterparts if-not build them further if emerging market currencies continue to weather a perceived shift in the outlook for Federal Reserve (Fed) interest rates as well as they have done so far.