💹 Major Currency Snapshot:
USDZAR: 18.26
EURZAR: 20.41
GBPZAR: 24.30
Introduction:
South Africa’s official unemployment rate increased to 32.9% in the first quarter of 2025, up from 31.9% in the final quarter of 2024. This rise in unemployment data contributed to the weakening of the South African rand. Meanwhile, the United States and China agreed to slash tariffs on each other’s goods for 90 days, a de-escalation in trade tensions that had previously roiled global markets and supply chains.
Key takeaways from sources:
- South Africa’s official unemployment rate increased to 32.9% in the first quarter of 2025, up from 31.9% in the final quarter of 2024. This was due to a decrease of 291,000 employed persons and an increase of 237,000 unemployed persons. The expanded unemployment rate also rose, reaching 43.1% in Q1 2025, compared to 41.9% in Q4 2024. This increase in unemployment data contributed to the weakening of the South African rand.
- The United States and China agreed to slash sweeping tariffs on each other’s goods for 90 days, a temporary ceasefire that followed pivotal talks. Under the deal, the US agreed to lower its tariffs on Chinese goods to 30%, down from previous rates as high as 145% and even 245% on some products, while China will reduce its tariffs to 10%. This de-escalation in trade tensions, which had previously roiled global markets and supply chains, led to markets rallying. However, analysts warn that uncertainty remains, as tariffs could potentially come back into force after 90 days, and deep sources of tension, like the US stance on chemicals used to make fentanyl, persist.
- In the United States, cooler-than-expected consumer inflation data for the previous month bolstered the case for potential Federal Reserve interest rate easing. Traders currently price in about 50 basis points of rate reductions by the end of the year, with the next quarter-point cut anticipated in September. The US dollar’s performance has been volatile; it steadied after a decline following the inflation data and improvements in the trade outlook but has also seen significant movements linked to trade optimism and concerns about erratic US policy, which some analysts believe has damaged the dollar’s safe-haven status. Global asset managers held their biggest underweight position in the dollar in 19 years in May.
Need a business partner that can help mitigate exchange rate risk?
Book an appointment with one of our treasury specialists.
If you are not subscribed yet, make sure to do so by clicking HERE and signing up.