The Rand Crumbles Despite US Dollar Weakening (We Predicted Both)
- Dynamic Outcomes
- Jun 17
- 6 min read
Welcome to our latest Weekly Rand Review...
...and another humdinger of a week, with the Rand reversing fortunes and weakening amid increased global tensions and Israel's unprecedented attack on Iranian nuclear facilities
The twist?
The USD Index actually hit new 3+ year lows—yet the Rand still stumbled.
...and the kicker?
We saw this reversal of fortunes coming (for both).
Let's break this all down...
Market Pulse 📊
The week delivered a masterclass in how global macro forces can overwhelm even the most compelling local stories. Despite 300 days without load shedding, record gold prices, and a Dollar at 3 years lows, the Rand stumbled from R17.73/$ to R17.88/$.
Price Action: R17.65-R18.06/$ range – Average daily volatility 1.1% (19 cents)
Technical Setup: Support held at R17.65/$, resistance emerged at R18.06/$
Momentum: Dollar strength overwhelmed geopolitical risk premium
Risk Events: US inflation data, SARB comments, Israel's Iran bombing, oil price
Correlated Moves: USD index makes new 3 year lows at 97.6, Gold +2.8%, Oil +4.2%, Bitcoin -2.1%
Monday opened at R17.73/$ with a briefly test towards but then it was more of the same from the prior week as the local unit managed to test below R17.70 by late morning...
...and hit R17.67 before closing around the R17.70/$ mark as global risk sentiment held steady - despite increasing tensions in the Middle East involving Israel and Iran.
Tuesday brought more mixed signals as the USD/ZAR traded in a slightly wider R17.66-R17.80/$ range before settling at R17.68/$. Once again, the Rand was under pressure in the morning, but the SA session saw consistent selling pressure around R17.78/$...
...while US session flows reversed some losses as markets absorbed the relatively benign inflation numbers.
US inflation data showed the CPI rising just 0.1% in May, putting the annual rate at 2.4%—exactly in line with expectations but still above the Fed's 2% target.
The data suggested Trump's tariffs weren't yet feeding through to consumer prices, despite naysayers and 'expert' economists warning that they would.
Midweek came and it was more of the same as the market again whipsawed in a range as Governor Kganyago's inflation target commentary that initially triggered Rand strength to R17.65/$...before profit-taking emerged in late US trading as the Rand slipped a few cents. T
he Reserve Bank's hints about preferring a 3% inflation target over the current 4.5% midpoint sparked brief optimism...that faded as markets questioned implementation timelines...
...but there was something else in the air, as behind the scenes, Israeli intelligence was reportedly finalizing plans for what would become the biggest military operation against Iran since the Iran-Iraq War, despite Trump's public call for a diplomatic solution.
Oil markets were already pricing in elevated geopolitical risk...
...and strangely enough, so was our USD/ZAR forecast from the previous week (as well as versus Euro and Pound)
As can be seen, Friday's forecast was expecting a bottoming out in the R17.95-17.51 area before rising, pushing back above R18.06...
...and now we had seen a test of R17.65 and a potential reversal.
All it needed was a trigger—and boy, did we get it!
Thursday's explosive action—literally began with Israel's pre-dawn "Operation Rising Lion" strikes on Iranian nuclear facilities. The attacks targeted nuclear facilities, military installations, and eliminated Iran's top military leadership, including IRGC commander Hossein Salami and nuclear scientists.
Normally such geopolitical shocks trigger immediate USD safe-haven buying and ZAR weakness—but this week something different happened...
...the US dollar was already under pressure globally and it weakened even more to hit levels last seen in March three years ago.
Normally this would mean the Rand strengthening, but it did just the opposite!
Opening at R17.68/$, the USDZAR jumped all of 26 cents (1.5%), the Rand's decline despite a weakening USD backdrop making the move even more significant—and suggesting underlying ZAR vulnerability that geopolitical tensions merely accelerated.
Of course, economists and your usual currency 'experts' were telling you why this had happened...
...but as usual—it's always after the fact, when it is too late to take any action!
While, for us, we looked instead at the underlying forces...
...that shape both the markets and the news...
And these told us that the sentiment cycles or waves were likely reaching at a low and the tide was about to reverse...
...enabling you to take timely action before the market moved.
Of course, you needed access to our charts to see these ;-)
Friday delivered the knockout punch for the Rand with Iran's retaliation dominating headlines, with explosions heard in Jerusalem and Tel Aviv, while oil prices surged 4% on supply disruption fears.
Again - the twist:
Even with the USD touching new 3 year lows of 97.60—the Rand weakened from R17.74/$ to R18.06/$.
Which is exactly what we had predicted—for both...
...see our USD Index outlook from 15 May below:
The 34-cent daily range (1.9%) reflected unprecedented volatility, as traditional correlations broke down completely.
This wasn't classic USD safe-haven strength overwhelming EM currencies—it was ZAR-specific weakness that geopolitical chaos merely amplified.
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And in other news...
Trump's Nuclear Talks Collapse: Iran announced it will not participate in nuclear negotiations with the US following the Israeli strikes, ending hopes for a diplomatic breakthrough.
The US distanced itself from the Israeli attack, with Trump repeating his statements that Iran can never have a nuclear weapon, and warning Tehran that they would feel 'the full strength and might of the U.S. Armed Forces'...
...which just so happened to coincide with a huge military display in Washington to celebrate their 250th birthday.
Oil Markets Explode Higher: Crude jumped 4.2% to $78.50/barrel as Iran threatened to target US bases in the region, though OPEC said the escalation didn't justify immediate supply changes
Gold Hits Fresh All-Time Highs: The precious metal surged to $2,434/oz on safe-haven demand and Middle East tensions, yet the Rand—despite SA being a major gold producer—couldn't capture any of those export benefits as dollar strength overwhelmed commodity dynamics.
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Volatility & Risk Analysis
The week's elevated volatility reflected unprecedented uncertainty as traditional market relationships collapsed.
Avg Daily Range: 19 cents (1.1%) – R190,000 per $1m USD position
Weekly Range: 41 cents (2.3%) – R410,000 per $1m USD position
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The Week Ahead
This week brings some potential triggers from US PPI and Fed Minutes to local Manufacturing PMI.
But it will be international headlines that will likely provide the biggest triggers the Middle East dominating, and Iran warning of bitter and painful revenge.
Where does this leave the Rand? Overall, while there may be some initial retracement, the bias is for more weakness in the coming days and weeks.
Expect more turmoil and turbulence
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This weekly newsletter is brought to you courtesy of Dynamic Outcomes, a Rand forecasting service focused on assisting exporters, importers and individuals in making more informed and educated decision around the timing of their foreign currency transaction – a critical factor in any risk management strategy. This is centred around providing an objective view of where the Rand is expected to move against the Dollar, Euro and Pound over the short, medium and long term.
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Disclaimer: The content of this Weekly Rand Review has been prepared by and constitutes the opinion of Dynamic Outcomes, a division of Dynamic Forex Solutions LLC (DFS); it is solely for informational and educational purposes and is not to be taken as advice, or an offer or solicitation to buy or sell the securities or financial products mentioned in the content nor a recommendation to participate in any particular trading strategy. No past performances of any strategy or forecasts are a guarantee of future performance; trading in financial markets involves substantial risk, and you need to do your own due diligence in managing this risk. While every care has been taken in ensuring that the content gleaned from third parties is from reliable sources, no responsibility or liability will be accepted by BeztForex or DFS as to the accuracy of the information contained here, which may be subject to correction or amendment at any time after publication.
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