Speaking ahead of the G-20 finance ministers and central bank governors’ meeting in Cape Town, SARB Governor Lesetja Kganyago highlighted rising trade and economic divisions that fuel uncertainty. US President Donald Trump’s policies risk fragmenting the global economy, he said. The SARB, which recently cut interest rates to 7.5%, has cautioned that escalating trade tensions could disrupt inflation and force central banks, including the US Fed, to reconsider rate policies. “The only thing that a small open economy can do is to strengthen its resilience, build the buffers, because this thing would come as a shock,” Kganyago added.

Note that today’s data card will be headlined by the December edition of the SARB’s leading indicator. Recall that the index rose for an eighth consecutive month in November, increasing by 2.4% y/y and reaching a two-year high of 114.7 points, up from a revised 114.1 in October. The indicator’s sustained growth reflects improving business conditions, supported by lower interest rates, subdued inflation, rising confidence linked to the Government of National Unity (GNU), and the absence of load-shedding. However, some of these supportive factors are subject to reversal. Moreover, the GNU faces a critical year, with mounting political pressure and uncertainty around policy direction. While current optimism has buoyed sentiment, sustaining confidence will require clear and decisive policy measures. Without them, the momentum behind the recent economic improvement may prove short-lived.

ZAR Markets

Recent developments in US markets are notable. Fed funds futures now price in nearly 50bps of rate cuts by December 2025, while Treasury yields have declined for four straight sessions. Consequently, the USD has come under some pressure as speculators unwind long positions. This broad-based USD weakness has offset fresh concerns about South Africa’s electricity supply amid the recent return of load-shedding. The USD-ZAR is treading water near the floor of its recent trading range just above 18.3000, with this expected to continue as long as the USD remains under pressure more broadly. Technically, it is worth noting that the USD-ZAR is being wedged towards a point where the market will need to either break higher or lower in the coming weeks (likely in early to mid-March) in order for longer-term support and resistance lines that are on collision course to hold up. The shorter-term pattern supports ZAR appreciation, but the longer-term trend suggests the pair may move higher once more.

Global FX Markets

The U.S. dollar rebounded on Tuesday after hitting a two-month low earlier in the week, supported by safe-haven demand following President Donald Trump’s confirmation that tariffs on Mexico and Canada would proceed as scheduled. The euro dipped from a one-month high to $1.0461, with future movement depending on the formation of Germany’s new coalition government. Sterling and the Australian and New Zealand dollars also edged lower. The dollar index stabilized at 106.75 after recovering from a recent low. Despite weaker U.S. economic data raising concerns about growth, the dollar remains resilient due to ongoing tariff uncertainty. Analysts suggest that risk-off sentiment ahead of tariff deadlines will continue to support the greenback. Meanwhile, the dollar strengthened against the yen, reversing recent losses caused by falling U.S. Treasury yields and speculation of a Bank of Japan rate hike.