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Investing.com -- South African rand is facing continued pressure as factors both domestic and international have negatively impacted the currency, according to UBS.
The global financial services firm noted that the rand has experienced a sell-off since late March, attributing the decline to local political challenges and adverse effects from US trade policies.
In light of these developments, UBS has revised its forecasts for the USD/ZAR exchange rate, anticipating further weakening of the rand.
The firm predicts that the global economy will likely face headwinds due to both existing and potential tariffs, which could dampen risk sentiment and add to the uncertainty in financial markets.
UBS also expressed concerns about South Africa's reform agenda, citing a deteriorating outlook as the Government of National Unity struggles to reach a consensus. This political stalemate is seen as a contributing factor to the less optimistic projections for the country's economic reforms.
As a result of these assessments, UBS has adjusted its quarter-end forecasts for the USD/ZAR pair. It now expects the exchange rate to reach 19.8 for the second quarter of 2025, up from the previous estimate of 18.2.
Additionally, UBS anticipates the rate to climb to 20.0 for the third quarter of 2025 through the first quarter of 2026, a significant increase from the former predictions of 18.0, 17.8, and 17.8, respectively.
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