RAND/LILANGENI MARGINALLY DEPRECIATES IN JUNE

MBABANE - During the month of June 2024, the Rand/Lilangeni exchange rate marginally depreciated against the US Dollar and the Pound Sterling, and marginally appreciated against the Euro.

In the month, the Rand was marked by strong volatility as the uncertainty surrounding the postelection results and the coalition discussions, weighed on the local unit. Despite the pronouncement by the African National Congress (ANC) to form a government of national unity (GNU) in South Africa, investor sentiments against the Rand soured as disagreement among political parties over the size and composition of cabinet ensued.

On the global front, the Rand along with the Lilangeni depreciated following better than expected first quarterly GDP growth in the United States. This prompted a change in investor sentiments raising expectations of delayed interest rate cut by the US Fed in the near-term. The domestic unit weakened marginally from an average of E18.41 in May 2024 to E18.44 to the US Dollar in June 2024.

It also depreciated from an average of E23.27 in May 2024 to E23.45 to the Pound Sterling in June 2024, while appreciating from an average of E19.90 to E19.85 to the Euro over the same review period. Going forward, the Rand is expected to remain volatile. Risks to the Rand’s outlook include the possibility of dysfunctionality in the new government, which would slow reforms and raise political uncertainties. Also key to the Rand’s outlook is the uncertainty of the US interest rate cut, with global markets still expecting the first cut and leading to a strengthening in the Rand along with the Lilangeni.

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