The South African rand has strengthened significantly this week, breaching R17.20 for the first time since January 2023. This surge is attributed to a new aggressive stimulus package announced by China, coupled with expectations of a widening interest rate differential between South Africa and the United States.
The rand broke below R17.20 for the first time since January 2023, bolstered by a new aggressive stimulus package in China and expectations of a continued, and growing, favourable gap between SA and US interest rates.
The rand also continues to benefit from the large US interest rate cut last week, and SA’s milder cut in comparison, says Annabel Bishop, Investec chief economist. "With SA cutting interest rates, at most, every two months, and the US every six weeks the underpin for rand strength remains, as the timing of interest rate decisions can aid in widening the interest rate differential between the two countries," Bishop said.
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