Rand remains firm ahead of CPI, budget & US talks

On Tuesday morning, the rand remained below R18.00 to the dollar and dropped to R17.88 — the strongest local currency level since the government of national unity was formed in May 2024.

This comes ahead of three key events today: Finance Minister Enoch Godongwana will re-table the national budget in Parliament, President Cyril Ramaphosa’s high-level meeting with US President Donald Trump at the White House, and Statistics South Africa’s release of the Consumer Price Inflation data for April.

The budget speech, dubbed Budget 3.0, will not include the proposed 0.5% VAT increase.

Instead, it will focus on a new financial plan to manage debt and boost economic growth.

Before the budget is delivered, Statistics South Africa is expected to release new inflation data.

Inflation dropped sharply to 2.7% in March, the lowest since June 2020, and below the South African Reserve Bank’s 3 to 6% target range.

Meanwhile, in Washington, Ramaphosa is joined by four key ministers, including Trade Minister Parks Tau and Agriculture Minister John Steenhuisen.

Their visit aims to reset the tense trade relationship between South Africa and the United States.

The meeting with President Trump at the White House this afternoon is seen as high-stakes, with potential impact on trade deals and investment. Talks have already begun behind the scenes between South African and US officials.

Global factors are also supporting the rand.

The US dollar has weakened due to concerns about rising American debt, trade uncertainty, and reduced confidence in the US economy.

This has helped boost emerging market currencies like the rand.

Economists say Wednesday will be a key day for the rand. 

Waldo Krugel, an economist at Northwest University, has described the strengthening of the rand as a positive sentiment.

"It's down to the view that the minister will probably try to manage the extra borrowing in a sensible way. I think everyone expects that he's not going to borrow a lot more money, and that's contributing to that stronger rand."

However, he warns that the exact reason for the rand’s positive performance is still unclear. 

"I don't know very specific details about deals made or proposals on the table or anything like that yet, hopefully by this evening we'll know more."

The rand’s performance on Thursday will depend on how markets respond to the new budget and the outcome of Ramaphosa’s meeting with Trump.

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