South Africa: Rand regains further lost ground in June
The South African rand (ZAR) continued to recover ground lost against the U.S. dollar over the past month amid improving investor confidence. The upturn came on the heels of a rebound in May when the currency pulled away from April’s all-time low. The rand ended 19 June at ZAR 17.33 per USD, marking a 5.2% appreciation over the same day in May. However, the currency was down 16.2% year-on-year and 19.3% year-to-date.
Sustained strengthening of the rand came against the backdrop of a gradual, albeit still slow, return of investor confidence amid rising hopes of a swift global economic rebound. The loosening of nationwide lockdown restrictions in South Africa in early June added further upside pressure to the currency. As a result, the rand rose to a three-month high of ZAR 16.61 per USD on 10 June, although it has pulled back somewhat since then owing to a wave of risk aversion due to rising fears concerns about a second global wave of coronavirus.
The rand is currently set to remain largely stable through to year-end, although the outlook is highly uncertain. Further ahead, the rand should rebound more decisively, as investor appetite returns after the economy emerges from the Covid-19 related downturn.