Why the South African Rand Is Strengthening？

The USD/ZAR price declined as the market reacted to the new deal between Pfizer and the South African government.

Meanwhile, the USD/ZAR also declined after the relatively strong South African PMI numbers. Further, business confidence has also risen, at a slower pace. The South African rand has also strengthened because of the relatively weaker US dollar.

THE INTERNATIONAL Monetary Fund (IMF) has revised South Africa's growth prospects for 2021 upwards due to a stronger-than-expected global economic rebound of 6 percent.

The IMF yesterday said South Africa's gross domestic product (GDP) would now grow at 3.1 percent this year, up from a revised 2.8 percent forecast in January due to vaccines concerns.

For 2022, the IMF in its World Economic Outlook said South Africa's economy would advance by 2 percent, up from the previous estimate of 1.4 percent before moderating at 1.6 percent in 2026.

The Rand has outperformed all major developed and emerging market rivals over multiple timeframes, placing pressure on a key

USD/ZAR support level that is the last technical impediment to more than two year highs around 13.87 for the South African currency.

USD/ZAR forecast

The daily chart below shows that the USD/ZAR price has dropped by almost 7% from the highest level this year.

USDZAR is approaching a support level, if it breaks below 14.48200 price could possibly continue rallying towards 14.41000. However if it fails to break below price could move to the upside.