Forex Report

Good morning

It’s Wednesday morning and for those of you clever enough to have taken Friday off we’ve already arrived at the end of the week!!!  April is always heavily disrupted by the barrage of public holidays but the last two weeks of the month have almost been a joke. 

These are the mid rates at 6:05 today:

Market News

• The good news is the Rand is trading at slightly better levels this week than last with us even managing to hit R18.48 to the Dollar on Monday while SA enjoyed yet another public holiday.  We’ve slipped into the R18.50’s since but with headlines out of Washington taking a more positive turn let’s hope there’s further gains for our currency as a risk asset. 
• Starting with international headlines the market has enjoyed a period of not only no new tariffs being imposed by the Trump administration, but also various concessions along with chatter about actual trade deals about to be announced.  The S&P500 index notched up a 6^th day of gains yesterday, its longest winning streak since the US elections last November, while the Nasdaq index is now up by 1% over April which is an impressive achievement when considering that it cratered by -13.3% in the days following Trump’s April 2^nd Liberation Day announcement.  The Dollar Index is slowly climbing after suffering big losses at the start of the month and its relatively slow progress is allowing the Rand to post gains in this risk-on environment. 
• April has been a rollercoaster ride when it comes to tariff headlines, first with surprisingly high reciprocal tariffs being unveiled on the 2^nd of April only for those to be delayed by 90 days on the 9^th, except for China where tariffs went on a tit-for-tat joyride up to 145% on Chinese goods and 125% on US goods respectively.  Peak uncertainty smashed equities, punished the Dollar and hurt the Rand, but over recent days we’ve had Trump and various senior US officials talk about imminent trade deals with India, Japan and South Korea (for starters) plus yesterday Trump announced a tariff exemption on various auto parts and materials for up to 2 years.  The improving tone out of Washington is fostering a much needed risk-on environment, and we hope that actual deals in the coming days help nurture these green shoots of optimism. 
• The Rand should benefit as trade deals draw closer to fruition and the following from Reuters shows how the market is hanging on every headline:  The Trump administration has taken measures to reduce the impact of automotive tariffs on foreign parts used in US-manufactured cars. China has exempted ethane from its 125% tariff on US imports, two sources familiar with the matter said, in the latest sign that the tariff situation is fluid. “The markets have been kind of weak, aimless, directionless at the beginning of the day and then you see discussions or bullet points come out from the White House and the market moves,” said Chris Wolfe, chief investment officer at Pennington Partners in Bethesda, Maryland. “I think it just shows that we’re really tied to watching politics and policy evolve in real time. The focus is, I think, rightly so on the tariffs and potential deals and tariff reductions.”
• On the local front we have been spared the proposed VAT increase to 15.5% from tomorrow but we now wait for Finance Minister Enoch Godongwana to table his Budget 3.0 framework which analysts say it will have to plug a R75bn revenue hole.  For now the good news from the Rand’s perspective is that despite weeks of heated debate the GNU remains intact, and while further challenges no doubt lie ahead our currency will benefit from the political stability. 
• Local market data today sees our private credit extensions at 8:00 followed by our March balance of trade at 2pm.  From the US their Q1 2025 GDP reading as well as the FED’s preferred inflation reading today which will set things up for the closely watched monthly jobs report on Friday. 
• Possible USD mid rate trading ranges in the Rand today are R18.45 and R18.75.

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