Simonis Storm FX Insight - Rand Resilient as Fed Pauses

The rand continues to hold firm against major currencies, supported by a stabilising global backdrop and improving local sentiment. Since late July, EUR/ZAR has moved from around 21.1 to 20.0, and USD/ZAR from 18.3 to 17.2 — a gain of roughly 5–6 percent for the rand.

The global policy story is key. The Federal Reserve delivered two rate cuts in September and October, lowering the effective funds rate from 4.33% to 3.87%, and is now expected to pause through early 2026. Markets price around 80 basis points of additional easing by mid-2026, implying the next leg of the cycle resumes in Q2 2026 once inflation and growth slow further.

In Europe, conditions remain softer, PMIs hover near 50, and the ECB’s policy stance is on hold amid stagnating activity. This divergence has kept the euro under pressure while limiting further dollar upside, providing a supportive mix for high-yield EM currencies like the rand.

Our fair-value framework, incorporating real-yield spreads, commodity terms of trade, and global risk premiums, points to a short-term range of 17.10 – 17.40 for USD/ZAR and scope for EUR/ZAR to test the high-19s if global risk appetite remains steady.

In essence, the rand’s resilience reflects a world where policy normalisation has paused, and where relative stability in Southern Africa now looks comparatively attractive.