Rand Review Quarterly Bulletin

We are pleased to present the Rand Review quarterly bulletin for Q3, 2018. The aim of the quarterly is to highlight significant South African Political & Economic events over the past 3 months and take a look at the Rand’s performance year-to-date.


Year to date Rand performance against major currencies
USDZAR: -14.3%
EURZAR: -10.7%
GBPZAR: -10.3%
AUDZAR: -5.8%

The Rand weakened by 2.8% against the USD over the third quarter of 2018. This performance was far better than expected after significant weakness across Emerging Markets drove the Rand down 13% near the beginning of September. The Rand was supported by an announcement at the 2018 BRICS summit, confirming China would begin to increase its investment in South Africa. Other positive news from the quarter included better than expected inflation figures and steady interest rates. Unfortunately, record high Government debtunemployment & a technical recession all contributed to uncertainty in the South African economy.

Performance against Emerging Market peers

As it stands, the South African Rand has weakened by 12.3% against the USD for the first 9 months of the year. Risk aversion towards emerging market economies increased following concerns of the potential impact of escalating trade tensions between the US and its trading partners, on global economic growth. Below you will see the Rand’s performance against the USD relative to the emerging market peers.


A stronger US dollar combined with a higher US interest rate environment could continue to affect emerging market economies negatively. Furthermore, lower than expected domestic inflation maintained the Rand’s favourable global carry trade appeal, however, this has not been realised year to date. A carry trade is a strategy in which an investor borrows money at a low-interest rate in order to invest in an asset that is likely to provide a higher return.

The sharp depreciation in the Turkish lira in August 2018 caused by US sanctions resulted in pressure on a broad range of emerging market assets and currencies. This resulted in a significant global sell-off of emerging market assets as investors became increasingly concerned about the high levels of US dollar borrowing by some emerging countries over the past decade. Unfortunately, portfolio inflows into emerging market economies reverted to outflows from May 2018.

Turnover in the South African Foreign Exchange Market

This graph represents the turnover (currency converted) in the South African foreign exchange market until July 2018. The average daily turnover in the foreign exchange market decreased further by 4.3%, from US$16.9 billion in the first quarter of 2018 to US$16.2 billion in the second quarter. The decrease in turnover can be attributed to a decline in the value of transactions against the rand, from US$10.5 billion in the first Q1, 2018 to US$10.0 billion in the Q2.

Turnover in third-party currencies also decreased slightly from US$6.4 billion to US$6.2 billion over the same period. Transactions in third currencies refer to transactions between any two currencies other than the South African Rand, traded in South Africa. The decrease in turnover in both categories (against the Rand and third currencies) could be attributed to reduced activity by non-residents and reflected increased risk aversion.

Notable Political & Economic events from the Quarter

Below we take a brief look at highlight and lowlights from the past 3 months. These events usually have a significant impact on the performance of both the Rand and SA economy.


06/07/2018 – US-China Trade war intensifies


18/07/2018 – SA Inflation rate ticks upwards


31/07/2018 – SA unemployment continues to rise. 


13/08/2018 – Rand suffers from Emerging Market contagion


23/08/2018 – Massive Bond outflows continue to hurt the Rand


04/09/2018 – South Africa slips into a Technical Recession


19/08/2018 –  And finally some good news, SA Inflation decreases.


21/09/2018 – Rand firms after SARB hold interest rates steady, citing better inflation. 

28/09/2018 – And lastly, a surprise positive Trade balance is reported for South Africa.


Overall a mixed quarter for South Africa and its Economy. We expect the Rand to soften over the coming months due to rising political risk as we move toward the 2019 National elections. If you have any question about the above data or the Rand in general, please feel free to get in touch.

If you would like to sign up to receive the Rand review Quarterly via email, please do so via the contact form. For more information on the data listed above, head over to the Economic & Exchange section of the Rand Review site.