Is it a good time to buy US Dollars from South African Rand?

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USDZAR Forecast highlights:

  • USDZAR surged to 20.0 and retraced sharply
  • Downward bias noted; as prices sank below 18.0
  • Use ZAR strength to buy into some USDs

How has USDZAR performed recently?

The USD-ZAR rate has had a rollercoaster ride over the past few months.

Due to unexpected policies such as tariffs coming out from the White House, USDZAR surged to the psychological level at 20.0. But that was a short-term rally. The advance was roundly rejected at that level.

After this failed upside breakout, the rate then went the other way and slipped below the multi-week floor at 18.00 (see right). Currently at 17.7, the trend here remains in favour of the South African Rand.

What next? Will ZAR be strong enough to reach 17.0? Maybe. The US dollar has been weakening over the past few weeks and this may eventually drag the rate into that floor.

Whether prices can break this floor is hard to say, since the rate will be quite oversold by then. A rebound off that level, which was affirmed as support back in October last year, is possible.

For now, the technical outlook here points to a gradual appreciation of ZAR against USD. A gentle descend into the lower side of the long-term range (17.0-20.0).

Is it a good time to buy USD?

Taking a long-term view, the South African Rand is observed to be the weaker currency compared to the US dollar.

However, from time to time the African currency would put on a decent rally against the greenback. For example, during 2020-2021 the ZAR gained a full five-point advantage against USD.

Now, having rallied from 20 to 18, is now a good time to buy USD? The answer is probably ‘yes’, especially if you need some USDs in the near term.

A rate below 18.0 is a good price, since that rate is a six-month low for USDZAR. You may be tempted to wait further to see if prices can sink below 17.50. Waiting, however, creates an added risk, as prices may rebound to test 18.0 as resistance.

Will ZAR get stronger?

Exchange rates are driven often by a relative comparison between two countries. Why the US Dollar is preferred (over that of an emerging currency) is well known. US has a stronger economy; USD is an international reserve currency and US assets act as a safe-haven avenue.

But events this year are undermining these US-friendly factors, events such prolonged tariff negotiations, higher interest rates and erratic geopolitical policies. Hence we saw the rate slip from 20.0 to 17.7.

For this rate to strengthen further (in favour of the Rand), South Africa with its new Government of National Unity (GNU) needs to implement further reforms, as suggested by the IMF. For example, IMF puts forward that GNU takesactions to enhance the business environment by cutting excessive red tape and administrative requirements“,  takes “further efforts to fight corruption, professionalize public administration, and improve the governance of state-owned enterprises” and implements “complementary labor-market reforms to reduce spatial disparities.

These positive policies will lift South Africa’s real GDP growth, lower inflation rate (see below), and shrinks the total unemployment. But these are long-term changes – changes that will require firm political capital to sustain.

Can the country achieve this? Investors are waiting. If top-down policy changes are unfolding in the right direction, investors will probably buy into the reform story. For now, the market is standing by.

Source: IMF (2025)

 

 

What is the USDZAR forecast in weeks?

The market does note really believe that ZAR can make more headway against the US dollar.
According to a panel of forecasters gathered by exchangerates.org.uk, most predictions are above current levels. The range of forecast is wide, but skewed to the upside.
But whether these optimistic predictions will materialise is another issue. USDZAR’s current trend favours a continuation of ZAR’s modest strength.


Source: ExchangeRates.org.uk

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