South African Reserve Bank Governor Lesetja Kganyago says the rand’s recent stability reflects a stronger, more mature economy and cautions that old assumptions about currency weakness no longer hold. He was speaking at an “inclusive growth forum,” hosted by the Kgalema Motlanthe Foundation, held in the Drakensberg this weekend.

Kganyago described 2025 as a surprisingly positive year for emerging markets, with the dollar weakening by about 8% from its January peak and global conditions shifting in South Africa’s favour.

“For South Africa, it has been a year marked by rising terms of trade, a stronger and less volatile rand, and lower domestic interest rates across the yield curve,” Kganyago said, noting that these outcomes defied earlier fears of tariff-driven turmoil. He questioned the long-held belief that a weaker rand automatically drives growth, pointing out that the past decade of currency softness coincided with sluggish output.

“Worse still, a currency can be undervalued for all the wrong reasons, in which case the standard benefits do not apply.”

Kganyago reaffirmed the Reserve Bank’s 27-year commitment to a free-floating exchange rate, crediting it with shielding South Africa from shocks while maintaining inflation control. He revealed that foreign exchange reserves have now exceeded $70 billion, satisfying all International Monetary Fund adequacy measures.