{"id":868337,"date":"2026-07-31T13:31:23","date_gmt":"2026-07-31T11:31:23","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=868337"},"modified":"2026-07-31T13:31:26","modified_gmt":"2026-07-31T11:31:26","slug":"rand-going-from-hero-to-zero","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/868337\/rand-going-from-hero-to-zero\/","title":{"rendered":"Rand going from hero to zero"},"content":{"rendered":"\n

August is historically the rand\u2019s worst month, and traders expect this year to be no different as questions about the central bank\u2019s policy stance add to seasonal woes for South Africa\u2019s currency.<\/p>\n\n\n\n

The rand has clocked an average loss of more than 2% against the dollar in August since 1997, when Bloomberg started compiling the data. <\/p>\n\n\n\n

The currency is particularly vulnerable as the European summer holidays kick off, with traders reducing risk and taking profit on carry positions before their break, said Hironori Sannami, a foreign-exchange trader at Mizuho Bank in London.<\/p>\n\n\n\n

\u201cThe rand, being one of the market\u2019s favourite carry currencies, often finds itself on the receiving end of that seasonal position-squaring,\u201d Sannami said.<\/p>\n\n\n\n

The currency is already coming off a losing month in July as doubts crept in about a key pillar of support: the South African Reserve Bank\u2019s hawkish bent. <\/p>\n\n\n\n

In a split decision last week, the central bank surprised the markets by keeping its policy rate on hold even as it warned about upside risks to inflation. <\/p>\n\n\n\n

The rand sagged more than 2% against the dollar immediately after that decision and has yet to fully recover the loss.<\/p>\n\n\n\n

\u201cThe market is looking for clarity as to whether the South African Reserve Bank\u2019s reaction function has changed given how much inflation risk is on the line,\u201d said Gina Schoeman, Citigroup Inc\u2019s economist for South Africa. <\/p>\n\n\n\n

The Wall Street lender\u00a0closed<\/a>\u00a0its bullish position on the rand versus the euro following the policy decision.<\/p>\n\n\n\n

The Federal Reserve\u2019s hawkish hold this week piles more pressure on the rand, according to Mike Keenan, a fixed-income strategist at Absa Group Ltd. The rand has benefited from its yield pickup over the dollar, which will erode if the Fed raises rates while the SARB stays on hold. <\/p>\n\n\n\n

Absa\u2019s interest-rate model suggests the rand should be trading at around 16.97 per dollar, Keenan said. That\u2019s almost 3% weaker than its current level of around 16.50.<\/p>\n\n\n\n

\u201cThe ongoing correction in global equity markets and the growing prospect of Fed rate hikes are likely to keep the rand on the back foot over the coming months,\u201d Keenan said.<\/p>\n\n\n\n

Meanwhile, foreign investors turned net sellers of South African bonds in July, with outflows of R6.2 billion through Thursday, compared with inflows of R9 billion rand the previous month. <\/p>\n\n\n\n

The government yield curve steepened as traders sold long-end bonds more aggressively on concerns about inflation following the rate hold.<\/p>\n\n\n\n

\u201cWe were surprised along with the market pricing and overwhelming economist consensus,\u201d said Ruen Naidu, a portfolio manager at Ninety One. <\/p>\n\n\n\n

While it\u2019s too early to say that the central bank\u2019s stance has shifted, \u201cthe early read is that the SARB\u2019s reaction function has shifted from \u2018much higher\u2019 to \u2018moderately higher for longer,\u2019\u201d he said.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n","protected":false},"excerpt":{"rendered":"

August is historically the rand\u2019s worst month, and traders expect this year to be no different.<\/p>\n","protected":false},"author":59,"featured_media":858311,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2083153714672451788","_sma_facebook_post_id":"191437357620492_2162585027895230","_sma_instagram_post_id":"18102375223929305","_sma_x_attempts":1,"footnotes":""},"categories":[11121],"tags":[3670,3619],"class_list":["post-868337","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-rand","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/868337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=868337"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/868337\/revisions"}],"predecessor-version":[{"id":868340,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/868337\/revisions\/868340"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/858311"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=868337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=868337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=868337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}