The USD remains significantly overvalued on a REER basis, supported by Trump’s policies, European economic risks, and a resilient US economy, suggesting any correction may be limited. Meanwhile, the ZAR is near fair value but remains sensitive to global trends, although South Africa’s upcoming Budget presentation could influence its trajectory.

Trump’s suspension of US aid to South Africa raises concerns over AGOA and broader geopolitical alignment, while new US tariffs on steel and aluminium signal a shift in trade policy.

US inflation data reinforced Fed caution on rate cuts, while SARB’s research supports lowering SA’s inflation target, which could initially mean higher rates but lead to long-term stability.