South African Rand Climbs Amid Soft Manufacturing Output
The South African rand strengthened, trading at R16.39 per dollar, R19.18 per euro, and R22.00 per pound, according to a report released by First National Bank (FNB).
The local currency is outperforming most emerging-market peers amid fragile optimism over the US-Iran ceasefire. However, markets remain cautious about the truce’s durability and the ongoing risks in the Strait of Hormuz.
The rand’s gains come despite a broader dollar strengthening ahead of US inflation data. Meanwhile, gold has held above $4,700 an ounce, heading for a third consecutive weekly gain as the US-Iran ceasefire has pushed oil prices lower, easing inflation fears.
A softer dollar has supported market demand, while attention shifts to the upcoming US-Iran talks and ongoing tensions in Lebanon. Gold is currently trading at $4,766 an ounce.
Brent crude has risen to $96.29 a barrel this morning, amid continued strikes on Lebanon by Israel, as well as disruptions in the Strait of Hormuz.
However, prices are still down by more than 10% on a weekly basis following the two-week ceasefire between the US and Iran. Supply risks remain in the Gulf due to reduced output.
South Africa’s manufacturing output declined by 2.8% year-on-year (y/y) in February, following a marginal 0.1% y/y decline in January, which was weaker than consensus expectations of a mild contraction.
On a seasonally adjusted basis, output fell by 2.2% month-on-month (m/m), reversing an upwardly revised expansion of 1.9% in January. This slowdown is consistent with survey data, as the Manufacturing PMI Business Activity Index dropped to 45.7 from 51.4 previously.
Over the three months leading up to February, seasonally adjusted manufacturing output declined by 2%, reinforcing the view that the sector is a drag on first-quarter 2026 GDP growth.
In the first two months of 2026, output was 1.5% lower than in the same period in 2025, with six of ten manufacturing divisions contracting.
FNB economists expect conditions to remain difficult in the first half of 2026, amid heightened uncertainty stemming from tensions in the Middle East and continued pressures from fuel-related input costs.
This downbeat assessment is supported by the PMI Expected Business Conditions Index, which sharply dropped to 46 in March from 68.8 in February, signalling that manufacturers expect operating conditions to remain challenging in the near term.
The February outcome reflected broad-based weakness, with seven of 10 manufacturing divisions reporting lower output.
The sharpest contractions were seen in wood and wood products (-9.7%), furniture (-5.8%), food and beverages (-4.5%), basic iron and steel (-3.6%), and motor vehicles, parts, and accessories (-3.1%).
Within the motor vehicles category, vehicle output declined by 1.6%, while parts and accessories fell by 4.9%, highlighting persistent pressure in this critical industrial segment. Money Market Rates Steady Amidst Heavy Liquidity
