For the past years, the South African rand has been weakening continuously due to the lack of economic growth and corruption during the presidency of Jacob Zuma. In recent years, the outbreak of the coronavirus pandemic only made the situation of the currency worse. This led to high rates of inflation in the country. The South African president has been taking steps to revive the economy and stabilize the currency.
In addition to that, as are most currencies around the world, the ZAR was expected to rally after the US presidential elections. During the weeks leading up to the US presidential elections, and in anticipation of a Joe Biden win, the ZAR had a turn of events as there was an increase in its exchange rate. Although there was an increase in the rand, there were also issues as the early results were in favor of Donal Trump. As news of tight elections continued to swirl, there was pressure on the ZAR as many investors bought more safe-haven currencies.
Moody’s report also played a great role in the activities of the brand. In 2016, the exchange rate of the USD/ZAR pair remained stable, but after President Trump won the elections, the currency fell further down. At the time leading to this election, the rand traded at 14.6472, but after the results projected Trump as the winner, the exchange rate fee rose to 14.1414.
As a result of the country’s weak economy, inflation, and an unstable political atmosphere, the rates didn’t increase further, which is why the country still struggled through the effects and the measures taken to reduce the spread of COVID-19.
According to etfinance review you can read here, a lot of South African traders are optimistic about this year’s US presidential elections, especially because the ZAR has started picking pace and has been stable for quite a while now. Because of this, many investors think that Biden will adopt a more subtle way of dealing with China instead of the major tariffs that were imposed by the Trump administration on the nation, and by so doing, South Africa will benefit from further exports to China as there will be more demand from them, leading to the growth of the South African economy and potential growth in the ZAR as well.
According to Elizabeth Andreae, the economy took place as the restrictions eased off, and they anticipated that the economy would increase some more. The US presidential election dominated the outcome of currencies and the rand was not left out, especially given the fact that investors expected a Biden win for bullish activities in the markets.
It was anticipated that in the case of a Biden win, there will be a large stimulus to boost the US economy which will lead to US support of the recovery of global economies, with South Africa getting positive spill-overs.
One important point made is that a Biden administration will be of great benefit to the major export market of South Africa like China.
And also, most investors anticipated that Biden won’t use tariffs to pressure China, which will be very beneficial to the Chinese economy, while allowing them to demand more raw materials, with South Africa being the main supplier. This will boost South Africa’s economy and currency together. After the results of the election, the ZAR surged, despite there being a resurfacing of new coronavirus cases. A lot of banks were bullish about the outcome as the year goes to an end.
The USD didn’t tumble to its 2018 low as was anticipated by Goldman Sachs. While many investors argue that the debts of South Africa will lead to a downward spiral of the ZAR in the future, many investors are positive that there will be a stronger dollar with the Biden win against Donald Trump will quickly resolve the coronavirus situation that is holding many economies back. And this will have a reapplied effect on South Africa’s rand.
