ZAR: USDZAR Hovers Close to YTD Low, Extends Solid Pullback From Record High

USDZAR (-1.3%) has fallen close to its YTD low at 18.0081, the Mar 18 low, and is now nearly 10% lower compared to April’s all-time high. Moderate greenback weakness and a solid recovery in spot gold through the European session have provided tailwinds for the rand, with sights turning to next support at 17.6191, the Dec 12 2024 low.

• Earlier comments from the Deputy Finance Minister – who said a new inflation framework will be announced “very soon” – has assisted rand outperformance, as a lower inflation target (likely 3% compared to the current 4.5% mid-point target) could imply higher-for-longer policy rates.
• Meanwhile, President Cyril Ramaphosa plans to hold talks with his US counterpart Donald Trump in Washington on May 21 in a bid to reset relations. Bilateral relations have hit new lows since Trump took office amid tensions over issues ranging from South Africa's genocide case against Israel at the International Court of Justice, its alleged persecution of white Afrikaner farmers, ties with Iran, and trade issues.
• Also on May 21, April CPI figures are due, while Finance Minister Godongwana will present a third iteration of the 2025 Budget. Deputy Finance Minister Masondo said today “I’m 100% certain that we’ll get it over the line.”