Rand Hits Records and May Strengthen Further Through 2026
Econ Desk
– December 9, 2025
4 min read
The South African rand strengthened past R17.00 to trade at R16.93 on Friday, marking its firmest level since 2023.
The dominant theme behind the rand’s good run has been dollar weakness.
For much of the past decade the dollar traded at levels a good 10% stronger than its moving average of the previous two decades. As President Donald Trump came to power last year the dollar lifted another nearly 10%. That very strong position is now coming off, which is in line with what the United States (US) wants because a softer dollar improves the competitiveness of US exports.
Against that dollar backdrop the rand has gained more than 10% this year.
Domestic factors have supported that gain – but to a secondary extent relative to the weakness of the dollar.
The Common Sense’s economics and policy editor Bheki Mahlobo said that South Africa’s prudent monetary policy, including a favourable interest rate differential with the US, the new inflation target of 3%, a confident medium-term budget policy statement, a primary budget surplus, and debt levels stabilised below 80% of GDP all contributed to support the rand.
But it is the external picture that has mattered even more.
The dollar index has dipped from 110 points in January to 98.99 points on Friday. The softer dollar has boosted commodity prices, including platinum group metals and gold, improving South Africa’s terms of trade. As a consequence, a terms of trade index rose from 107 points in January to 119 points in December, an 11% increase and the highest reading since 2022 (terms of trade measure the prices of exports compared to imports and the recent rise signals a more favourable trading position). This has lent further support to the rand.
Mahlobo said that if Kevin Hassett is announced as the next Federal Reserve chair and the US runs its economy “hotter” by cutting rates and tolerating higher inflation, the dollar will weaken further and the rand may spend much of 2026 at levels of around 16-something to the US dollar.
