Southern Africa’s 2025 currency market outlook

Southern Africa's currency market outlook for 2025 is under scrutiny as the Rand, Zambia's Kwacha, and Mozambique's Metical face significant pressures. The factors driving these currencies include monetary policy shifts, global economic uncertainty, political unrest, and climate challenges. With the return of Donald Trump to the US presidency, there are expectations of a significant impact on the global economy. Andre Cilliers, Currency Strategist at TreasuryONE, provided insights into the current state of these currencies and the challenges they are likely to face in the coming year. In South Africa, the fundamentals seem sound with a focus on fiscal discipline and prudent monetary policy management. The country has made improvements in areas like load shedding and infrastructure development, which are expected to contribute positively to exports. However, political uncertainties in other countries like Germany, France, and Canada, as well as changes in the Chinese economy, could have ripple effects on South Africa and the broader African market. Mozambique is grappling with political unrest and cash flow issues, which are likely to hinder economic growth and investor confidence in 2025. The disruptions at the Maputo border and reliance on imports from South Africa pose additional challenges for the country. Cilliers emphasized the need for regional cooperation and dialogue to address these issues effectively. Meanwhile, Zambia is facing challenges related to drought and declining copper production, impacting its agricultural and export sectors. The country's reserves and currency are under pressure as a result. Cilliers suggested that resolving the agricultural issues could potentially help stabilize the economy and currency, but long-term solutions are needed. Overall, the outlook for Southern African currencies in 2025 is a mix of optimism and caution. While some countries like South Africa show promise with their sound fundamentals, others like Mozambique and Zambia face significant hurdles that require immediate attention and collaborative efforts. The regional dynamics and global economic shifts will play a crucial role in shaping the currency market in the year ahead.