The South African rand remained under pressure this week, even after the recent credit rating upgrade and the growing optimism about the country. The USD/ZAR exchange rate was trading at 17.20, a few points above the year-to-date low of 16.95. It remains about 13.75% below the highest point this year. 

South African Rand wavers as experts remain optimistic about the economy

Top economists are highly optimistic that the South African economy is doing modestly well. This optimism rose after Enoch Godongwana, the Finance Minister, delivered an optimistic budget. 

He said that the country would have higher revenues with no tax increases. At the same time, the minister said that the government was committed to fiscal consolidation.

Most importantly, the bank announced a new inflation target. While concuring with the South African Reserve Bank (SARB), the minister said that the government would target a 3% inflation rate instead of the band between 3% and 6%. 

South Africa’s economy is also doing well because the concept of load-shedding has eased in the past few months. Load-shedding is a situation where parts of the country experienced long power blackouts because of Eskom problems. 

Top South African analysts are bullish about the economy, with some of them calling it an inflection point. Emrie Brown, a top analyst at RMB Bank said:

“All of that really for me points towards a permanent inflection point and that we’ve reached a positive trajectory. I definitely think the sentiment is the most positive I have seen in two decades. It’s really big.”

South Africa credit rating upgrade

Meanwhile, S&P Global, one of the top ratings agency, has upgraded the country for the first time. It moved the rating by one level to BB, two steps below investment grade. The agency also left the country’s outlook to the positive zone.

S&P Global upgrade sets the stage for other agencies to follow suit. Moody’s will publish its statement on South Africa on December 5, while Fitch will deliver its statement by March next year. Goldman Sachs analysts said:

“In our view, it is also likely that Fitch will upgrade its sovereign rating for South Africa to BB by March 2026, which would bring it in line with S&P and Moody’s.”

These statements come at a time when most South African assets are doing well. For example, bond yields have plummeted, with the closely-watched 10-year yield moving to 8.60% from the year-to-date high of 11.27%. Similarly, South Africa’s stock market has also jumped by 45% in dollar terms this year. 

Rand has soared by over 10% in 2025 despite the ongoing geopolitical tensions with the United States. Trump has imposed a 30% tariff on goods from South Africa, the highest in sub-Saharan Africa.

USD/ZAR technical analysis 

USD/ZAR chart | Source: TradingView

The daily timeframe chart shows that the USD/ZAR exchange rate has been in a strong downward trend in the past few months, moving from a high of 19.93 in April to the current 17.20.

The pair has remained below the 50-day and 100-day Exponential Moving Averages, a sign that bears remain in control. It has also formed a small head-and-shoulders pattern.

Therefore, the most likely scenario is where the pair continues falling, potentially to the year-to-date low of 16.95. A move below that level will point to more downside, potentially to the psychological level at 16.0.

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