If you’re looking for advice on the rand’s direction, take note of one key signal: the strength of the US dollar. According to The Common Sense’s Economics and Policy Editor, Bheki Mahlobo, the level of the rand is driven primarily by movements in the dollar. “The value of the dollar is the most important indicator to watch, more so than any local news or policy statement,” Mahlobo stresses.

The South African currency has lost nearly half its value against the US dollar in the past decade, a decline tied closely to both South Africa’s weak growth and global risk aversion. While local challenges, ranging from sluggish GDP growth to ballooning debt, continue to put pressure on the rand, the biggest shocks to the currency tend to come from global markets.

If foreigners reduce their exposure to South African assets and emerging market currencies, swings in the US dollar set the tone for rand volatility. Dollar strength will likely be a key determinant of whether the rand is likely to weaken further, raising costs for imports, travel, and savings.

For investors and businesses, Mahlobo’s message is clear: “Keep your eye on the dollar. If it strengthens, the rand will likely come under more pressure—regardless of local developments.” Managing currency risk through hedging, diversification, or smart timing has never been more important.