Risk Aversion Keeps South African Rand Weaker Against FX Majors
The South African rand is relatively weaker overnight, trading at R16.55 to the dollar, R19.38 to the euro, and R22.36 to the pound, First National Bank said in a morning brief.
The ZAR strength wanes against crosses amid ongoing global risk aversion and anticipation of the US Fed’s impending interest rate decision, which may affect emerging market currencies.
The Federal Open Market Committee (FOMC) began its two-day policy meeting yesterday, with markets fully pricing in a steady interest rate range of 3.50% to 3.75%.
First National Bank (FNB) said, besides the vote itself, this meeting is historically significant as it could mark Jerome Powell’s final press conference before his term as chair expires on 15 May 2026.
Since the March meeting, Fed officials have flagged that while the labour market remains resilient, uncertain geopolitical developments in the Middle East and the subsequent surge in energy prices have slowed progress on inflation.
Investors are bracing for three primary scenarios: a hawkish hold, a dovish pivot, or a transition shock. In the base case, Powell is expected to maintain that the Fed is in “wait-and-see” mode, resisting any commitment to rate cuts in 2026 – a move that would likely stabilise the 10-year Treasury yield in the near term.
A dovish pivot, while unlikely given the surge in oil prices, could spark a significant equity rally if Powell hints at a September cut, FNB said in a morning brief.
Brent crude oil is at $111.37 per barrel for the first time in three weeks, driven by supply constraints amid heightened geopolitical tensions as the US and Iran appeared to have made shallow progress towards a peace deal that would fully reopen the Strait of Hormuz.
Gold remained relatively range-bound at $4 602.29/ounce this morning as investors remained cautious ahead of the US Federal Reserve’s interest rate announcement, which could signal future monetary policy and affect the attractiveness of non-yielding assets. XRP Tops $1.40 as SEC Reaffirms $XRP Digital Commodity Status
