The stakes for South African currency watchers have rarely been higher. Bheki Mahlobo, Economics and Policy Editor at The Common Sense, says many South Africans have misunderstood recent rand stability, mistaking it for underlying economic resilience.

“After Donald Trump’s victory last year, the US dollar saw a period of softness, coming off by around 10%, driven by global shifts in risk appetite and changes in American fiscal and trade policies. As a consequence, the rand appeared to show resilience, but this wasn’t a story about rand strength, rather about dollar weakness,” Mahlobo explains. “When the world’s reserve currency slides, emerging-market currencies like the rand can appear stronger by default. That gave the impression that South Africa’s fundamentals may have improved, when in reality very little had changed in the domestic economy.”

Mahlobo points to data from the past decade showing that the real effective exchange rate for the rand remained volatile, and any periods of apparent recovery were quickly reversed when global dollar sentiment shifted. “It’s essential for South Africans to recognise that the value of the rand is primarily determined by the US dollar’s movements, not by what’s happening in Pretoria. Watching the dollar, not local politics, gives you a much better read on where the rand is heading,” he adds.