Barclays' Near‑Term Rand Outlook
Barclays expects the South African rand (USDZAR) to appreciate in the near term. Its international factor model indicates the rand is approximately 1 % undervalued at current levels, and the South African Reserve Bank’s continued tightening of monetary policy provides additional support for the currency in the short run.
Over the medium term, the bank projects further USDZAR strengthening as the U.S. dollar gains, reflecting a broader outlook for dollar appreciation across global markets. Barclays notes that the pace of rand depreciation should be smaller than in previous dollar‑appreciation cycles because the rand enjoys a high‑carry status in the Central and Eastern Europe, Middle East and Africa (CEE‑MEA) region. This high‑carry characteristic is expected to offset part of the pressure from a stronger dollar, tempering overall depreciation.