Rand Strengthens as Dollar Slumps in First Half of 2025

Good morning

It’s the last day of June and with it the first half of 2025 is coming to a close.  Safe to say it has been a good six months for the Rand as we opened the year at R18.86 to the Dollar and find ourselves at R17.80 this morning, this as the Dollar Index is about to notch up its worst first half of a year since the 1970’s. 

These are the mid rates at 6:00 today:

Market News

• The Rand has gained significant ground over 2025 thus far but while we don’t want to be greedy about things one feels that our gains could be even more impressive had it not been for local political headlines which are seeing some unease creeping into the market.  We managed to stay below the key R18.00 threshold on Friday given that the day’s worst level came in at R17.93, hopefully we can hold this position over the rest of the week.
• While it’s a normal week for the rest of us the Rand is looking forward to a shortened week thanks to the US public holiday on Friday, the 4^th of July, but with a packed calendar between now and Thursday afternoon it will be interesting to see what direction the market takes.   The good news in that the Dollar is languishing at its worst level against its major peers in almost four years, a slump that is allowing the Rand to stay below R18.00 despite local tensions on the rise, and hopefully the Dollar can remain under pressure as this week’s events unfold. 
• Internationally there are a lot of moving parts to keep track of with these including the US and China announcing an improved trade deal late last week, Trump halting all trade talks with Canada due to their digital tax policy which he took umbrage against, Canada rescinding its digital tax policy to try and get Trump back to the table, US lawmakers trying to get Trump’s “one big beautiful tax reform bill” passed before his deadline of this Friday and then the all important monthly US jobs report which comes out this Thursday.  All of this is coming against a backdrop of not only the FED quietly talking up the chances of an interest rate cut, but Trump ratcheting up the pressure against Jerome Powell by saying he would love it if the FED Chair resigns before his term is up, and the end result has been prolonged Dollar weakness. 
• The following is from Reuters and talks to the ever increasing chances of a FED rate cut in September weighing on the Dollar:  The Dollar wallowed near its lowest in nearly four years against the Euro on Monday as market optimism over US trade deals bolstered bets for earlier FED interest rate cuts. Bets for at least one quarter-point reduction by September have risen to 92.4% according to CME Group’s FedWatch Tool, from about 70% a week earlier. “The market pricing implies a cut as a slam dunk” in September, Chris Weston, head of research at Pepperstone, wrote in a client note. Thursday’s monthly U.S. payrolls report is “the marquee risk event” this week, Weston said, and the risk to the Dollar “seems asymmetric given the FED’s reaction function is biased towards the timing of the next cut.” That means the Dollar is more likely to suffer a rout on weak numbers than rally on a hot outcome, he said.
• Lots to keep our eye on abroad but local developments are just as important as tensions within the GNU seem to be escalating on a daily basis.  The squabble kicked off last week when Cyril Ramaphosa fired DA deputy minister Andrew Whitfield for travelling to the States without the president’s permission, and the DA hit back demanding that Ramaphosa also fire a number of ANC cabinet members accused of corrupt behaviour.  Threats and insults have ramped up with the DA officially withdrawing itself from the planned National Dialogue in August, a platform to be used for setting GNU policy, while the ANC has said that if the DA brings a motion of no confidence against Ramaphosa then it is effectively exiting the party from the GNU.  The Rand does not like political uncertainty so hopefully the GNU survives this round of sabre rattling. 
• Local market data today sees our private credit extensions at 8:00 followed by May’s balance of trade at 2pm. 
• Possible USD mid rate trading ranges in the Rand today are R17.65 and R17.95.

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