The rand has been one of the better-performing emerging-market currencies this quarter, helped by a softer dollar, firm precious-metals prices and improving sentiment around domestic reform. But USD/ZAR remains a high-beta pair: when global risk appetite turns, the rand is usually first out of the door.
Supportive factors
- Gold and platinum strength improving the terms of trade
- Attractive carry: South African real rates remain among the highest in the G20 emerging-market group
- Steadier electricity supply supporting growth forecasts
Risks to watch
- A risk-off shock in US equities, which typically lifts USD/ZAR sharply
- Fiscal slippage ahead of the Medium-Term Budget Policy Statement
- A surprise dovish turn from the SARB narrowing the carry advantage
How we’re trading it
We favour selling USD/ZAR rallies into resistance rather than chasing the rand at current levels. Remember that ZAR pairs have wider spreads and larger daily ranges than the majors, so size positions accordingly. On a Standard account the typical USD/ZAR spread is 65 points, compared with 30 on Raw ECN.
Rule of thumb: halve your normal position size on USD/ZAR versus EUR/USD to keep the same rand risk per trade.