The rand could hit R18 to the dollar next year
Anchor Capital has warned that risks to the rand remain incredibly high and could reach R18 to the dollar, but the group is optimistic that it will sit at around R16/$.
The investment company said that Q2 of 2026 was heavily volatile, marked by the United States and Israel’s attacks on Iran and the subsequent closure of the Strait of Hormuz, where over 30% of global oil flows.
This led to an unprecedented spike in oil prices, as Brent crude futures jumped to US$76/bbl, peaking near US$126/bbl during the height of the conflict.
“Since the start of the conflict, US President Donald Trump has declared 39 times that the war was won and that there was a peace agreement, only to walk back those comments a few days later,” said Anchor.
A 14-point memorandum of understanding was signed by the two countries, allowing oil to flow through the Strait once again. However, countries are still currently trading blows.
Despite these headwinds, the rand has demonstrated notable resilience. Anchor noted that the local unit has traded firmer against the US dollar than at the start of 2026.
Anchor said that the rand has been on a gradual recovery path from significantly oversold levels over the last three years.
This has been due to the US dollar losing value against other currencies, improved terms of trade, and a steady improvement in South Africa’s political and economic fundamentals.
“While this overall positive trend remains intact, it has been overshadowed in the near term by heightened global geopolitical uncertainty,” said Anchor.
“Forecasting the value of the rand in a year is a fool’s errand, as the local unit usually trades within a R2.00 range against the US dollar over 12 months.”
It added that the risk of negative surprises to one’s view is especially high at the moment, with the rand quite easily able to weaken to around R18.00/$ this time next year.
That said, Anchor said that if one looks realistically and considers a scenario where the war will probably end within the next year, some recovery in the rand is likely.
The group thinks a level of around R16.00/$ is reasonable amid a potential rally as inflation declines.
There is also likely to be a higher risk premium applied to emerging markets for a while after the cessation of hostilities in the Middle East.
Strength seen over the last week
Investec Chief Economist Annabel Bishop has echoed this positive sentiment, noting that the rand has remained relatively stable since the return to conflict between the United States and Iran.
Bishop said that the rand followed global markets last week, weakening amid the escalation of conflict in the Middle East.
The rand traded around R16.25/$ after the US and Iran agreed to a ceasefire, but was trading at around R16.58/$ last week as oil prices climbed towards $90 per barrel.
Iran has also vowed not to allow a single drop of oil or gas to flow through the Strait as the United States increases its attacks against the country.
This time around, markets are far more confident, or at least more hopeful, that the countries will move towards a permanent ceasefire and re-opening of the Strait.
The rand has remained relatively stable amid the return to war in the Middle East, which Bishop attributed to improving fundamentals domestically, especially government finances.
South Africa has recently received credit rating improvements, with foreign investor sentiment towards South Africa being positive.
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