South African rand trajectory in 2025

The South African rand has been steady following President Cyril Ramaphosa's announcement of a second wave of reforms aimed at boosting economic growth. The currency had a bumpy ride, especially since the inauguration of President Donald Trump. Harry Scherzer, the CEO of Future Forex, highlighted the volatility in the rand's performance, noting that Trump's comments on South Africa had a significant impact on the currency. Initially, there was concern about the impact of Trump's 'America First' policies on the rand. However, the currency experienced a sharp decline when Trump criticized the expropriation without compensation bill in South Africa. This led to the rand weakening to 19 to 1 against the dollar. Nevertheless, the rand has since recovered to around 18.44 following South Africa's response to Trump's claims and the State of the Nation Address, which boosted investor confidence. Scherzer emphasized that the market's confidence in South Africa's response has contributed to the rand's resilience. The interview also delved into the market's reaction to Trump's announcements and executive orders, which can trigger significant volatility in currencies. Trump's influence as a powerful figure can sway market sentiments with a single tweet. The ongoing trade tensions and tariff implications with China further add to the market's uncertainty. South Africa's dignified response to Trump's critique and its efforts to address domestic challenges like load shedding and infrastructure improvements have been positively received by investors. Scherzer discussed the rand's performance relative to other emerging market currencies, noting that the rand had a strong showing in 2024. South Africa's ties with the US make it more susceptible to the impact of Trump's statements compared to other emerging market currencies. Despite local challenges such as political tensions and infrastructure concerns, the global dynamics play a more significant role in influencing the rand's performance. Looking at future developments, Scherzer emphasized the importance of monitoring international factors, such as the resumption of funding from Trump and potential interest rate changes. Internally, addressing issues like load shedding and promoting political unity within South Africa will be crucial for the rand's stability and growth. Overall, the outlook is positive for the rand if internal and external factors align in the coming months. As the South African rand continues to navigate global and local dynamics, investors will closely monitor developments to gauge the currency's trajectory in 2025.