The rand remained stable against global currencies on Thursday and the country and investors wait to hear from President Cyril Ramaphosa, who is expected to brief the country in the State of the Nation Address later in the evening.
The ZAR was trading at around R18.57 to the dollar at 7:15am on Thursday.
The rand was trading at around R19.27 to the euro and R23.19 to the pound.
Optimistic and positive
Nolan Wapenaar, the Co-Chief Investment Officer and Head of Fixed Income at Anchor Capital said that South Africans should view SONA and its impact with optimism and positivity when it comes to investor sentiment and how the rand performs.
"We are probably more sanguine on the SONA. The sentiment toward emerging market currencies is being driven by actions out of the United States at the moment," he explained.
"It is unlikely that the SONA will have a major impact. We are however watching the SONA in an attempt to gauge how much other parties in the Government of National Unity (GNU) have been considered and how the GNU is holding up."
"We are also looking for signs of progress on the reforms that are clearly underway," he added.
Rand hinges on SONA
Andre Cilliers, currency strategist at TreasuryONE told Reuters that the rand will be impacted by Ramaphosa’s address.
"Rand sentiment hinges on SONA and US-China trade war developments. Stronger messaging on reforms and fiscal discipline could support South African assets," he explained.
"Investors remain cautious, with global trade tensions keeping risk appetite subdued," Cilliers warned.
Trump and the rand
The ZAR has been pushed and pulled by international geopolitical events over the last week mainly from the US and President Donald Trump's latest actions and statements.
On Monday, Trump said that South Africa was "confiscating" land and "treating certain classes of people very badly".
The US leader said on his social media platform, Truth Social, that America will not stand for this and will act.
He will only send future funding to South Africa once a full investigation has been conducted.
The US provides South Africa with more than $400 million (R7.4 billion) in funding and aid.
Trump’s statements earlier this week sent the rand into a tailspin.
Last week Friday the rand was trading at around R18.64 at the close of business but by 8:30am on Monday this week the rand had lost ground and was trading at around R18.95.
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