South Africa Exchange Rate September 2020

South Africa

South Africa: Rand hits six-month high in September amid higher risk appetite

September 21, 2020

The South African rand (ZAR) gained considerable ground against the U.S. dollar in recent weeks, largely reflecting improved risk appetite and a turnaround in investor sentiment amid the easing of Covid-19-induced lockdown restrictions. On 17 September the rand hit a six-month high of 16.23 ZAR per USD, before weakening somewhat and trading at 16.27 ZAR per USD on 18 September, which marked a 6.5% appreciation over the previous month. Despite this upturn, the rand remained down 10.0% year-on-year and 14.1% year-to-date.

The currency was primarily buoyed over the past month by a higher risk appetite for emerging-market assets. A weakened U.S. greenback drove investors towards higher-yielding assets, which supported demand for the ZAR. Moreover, market sentiment was lifted by the easing of Covid-19 lockdown measures in mid-September. Furthermore, the South African Reserve Bank’s (SARB’s) decision to keep rates on hold in its 17 September meeting signaled that the easing cycle may have come to an end and provided a further boost to the currency.

Going forward, the rand is currently forecast to weaken slightly from current levels as a prolonged public health crisis and the frail economic backdrop are set to weigh on the currency. Further ahead, the ZAR should regain some ground as the economy recovers from the Covid-19-induced downturn.

FocusEconomics Consensus panelists see the ZAR ending 2020 at 17.11 per USD and 2021 at 16.78 per USD.


Author:, Economist

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South Africa Exchange Rate September 20 20

Note: United States dollar against the South African rand.
Source: Refinitiv.


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