Two big risk events are on tap for the rand, first is the conclusion of Wednesday’s FOMC meeting and the second is the May 8th vote. Initial expectations are that we could see a more dovish Fed meeting which could deliver some broad dollar weakness, which would benefit the rand. The outlook on the South African General Election is that it could provide little impact to the rand as the ruling African National Congress is widely expected to win.
While many are dismissing the South African elections, they could be in for a surprise if South African president, Cyril Ramaphosa has a huge win. A decisive victory means he could have an easy path to deliver major reforms that would be supportive for economic growth, which could provide some solid rand buying.
In the 2014 national election, the ANC won 62.2% of the vote, but in 2016 during the municipal elections saw the ANC lose 10 percentage points with a slight win with 55% of the vote.
Ramaphosa is expected to remain President and for his party to win anywhere between 54% to 61% of the vote. If we see a stunning upset and he loses power, we could see severe pressure on the rand.