As the market weighs up a finely balanced SARB announcement, the focus is on how currency dynamics intersect with domestic monetary policy, says Harry Scherzer, CEO of Future Forex.
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“The Reserve Bank hiked to 7% in May on inflation risk, its first hike since 2023, and CPI has stayed stubbornly above target since,” he says. “And the calculus keeps shifting. The Middle East ceasefire that briefly eased the oil shock behind May’s move has since fallen apart, with crude climbing again. Yet at 7% against inflation near 4.5%, policy is already restrictive – a genuine handbrake on the economy.”
Economists remain split. Bank of America is pencilling in another hike, while Investec expects a hold. “That divergence tells you how close this meeting is,” Scherzer says. “On balance, the MPC looks set to hold steady, but people and businesses shouldn’t build a forex strategy around guessing correctly.”
“The direction of the next 25 basis points matters less than how exposed you are to the volatility around it,” says Scherzer. “That’s true whether you’re a business making international payments or an individual sending money abroad.”
“In this climate, banking on today’s rate is no longer a viable strategy,” Scherzer adds. “Whether it’s a business settling international invoices or an individual transferring funds for offshore investment, emigration, or property purchase, timing that transfer around known event risk — or locking in a rate in advance — can make a meaningful difference to what actually lands in the receiving account.”
Currency risk as background noise
Too many people and SMEs, Scherzer notes, still treat currency risk as background noise rather than something to manage actively. “Markets expecting a rate hike can be wrong-footed by a hold, and those expecting a hold can be caught by a hike. Either way, the rand can swing several percent in one session. If you’re transferring a significant sum, that swing is real money — gained or lost — depending purely on timing.”
Ultimately, concludes Scherzer, this week’s decision will be less about domestic overheating and more about how the SARB balances external volatility against a fragile growth backdrop. “Whatever the MPC decides, the people who come out ahead won’t be the ones who called the rate right — they’ll be the ones who planned their transfer with the volatility in mind, rather than against it.”
