{"id":848650,"date":"2026-01-23T09:19:20","date_gmt":"2026-01-23T07:19:20","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=848650"},"modified":"2026-01-23T09:19:29","modified_gmt":"2026-01-23T07:19:29","slug":"rand-shoots-the-lights-out-as-it-eyes-r16-to-the-dollar","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/848650\/rand-shoots-the-lights-out-as-it-eyes-r16-to-the-dollar\/","title":{"rendered":"Rand shoots the lights out as it eyes R16 to the dollar"},"content":{"rendered":"\n

The South African rand has blasted through the R16.30 per dollar roadblock it hit in the past week of trade, and is marching towards its fairer value of R16\/$.<\/p>\n\n\n\n

The rand hit its strongest levels in three-and-a-half years on Friday, trading at R16.09 against the dollar in early trade. It last traded at these levels in June 2022.<\/p>\n\n\n\n

The gains are also broad-based, with the rand also strengthening the pound (R21.73) and the euro (R18.91).<\/p>\n\n\n\n

The local unit had a surprisingly resilient 2025, benefiting from a strong turn in sentiment towards the South African economy and the weakening of the US dollar amid global geopolitical tensions.<\/p>\n\n\n\n

After trading at record highs above R19\/$ in the earlier months of 2025, the currency staged a significant turnaround by the end of the year, trading under R17\/$.<\/p>\n\n\n\n

In the early weeks of 2026, the rand pushed to three-year highs against the dollar, trading below R16.50, but hit a roadblock at the R16.30 resistance level.<\/p>\n\n\n\n

Economists and analysts noted that local markets would need to gain significant momentum to push past this level, which was seen as challenging, given the rocky start to the year.<\/p>\n\n\n\n

While South Africa’s market was muted and riding the tailwind of 2025, global markets were thrown into volatile territory by the United States’ attack on Venezuela and US President Donald Trump’s aggressive stance on Greenland.<\/p>\n\n\n\n

The US launched a military “intervention” in Venezuela in the first week of the year, abducting the country’s president, Nicolas Maduro, on allegations of drug trafficking.<\/p>\n\n\n\n

In the weeks that followed, Trump threatened US action to take control of Greenland ‘one way or another’, and the White House warned of additional tariffs on European countries that did not support it.<\/p>\n\n\n\n

With markets forced to contemplate monumental shifts in global order and superpowers’ disregard for the rule of law, investors ploughed into safe havens.<\/p>\n\n\n\n

Notably, Trump’s escalating standoff with European countries sent gold to new highs.<\/p>\n\n\n\n

This helped drive South Africa’s rand to a three-and-a-half-year high of approximately R16.29 per dollar\u2014breaking the barrier.<\/p>\n\n\n\n

“The ongoing rotation out of US assets into gold will ensure that the USD is hamstrung and that commodity currencies such as the rand do well,” ETM Analytics said in a research note.<\/p>\n\n\n\n

Rand is pushing even higher<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The good news for the rand kept coming this week, however.<\/p>\n\n\n\n

Following meetings at the World Economic Forum (WEF) in Davos this week, the Trump administration seemingly pulled back from its aggressive stance on Greenland and escalating the tariff war with Europe.<\/p>\n\n\n\n

This brought welcome relief and stability to global markets, feeding risk-on flows and benefiting emerging-market currencies like the rand.<\/p>\n\n\n\n

As a result, the South African currency strengthened even further to trade at R16.10 against the dollar in early trade on Friday, 23 January.<\/p>\n\n\n\n

This puts the currency within reach of Investec\u2019s purchasing-power-parity (PPP) valuation of R16.00\/$.<\/p>\n\n\n\n

The positive shift isn’t solely down to global shifts, however. Locally, sentiment toward South Africa’s economy remains positive.<\/p>\n\n\n\n

The country was removed from the FATF grey list in October 2025, tabled a credible mid-term budget in November, and even experienced its first rating upgrade in 20 years.<\/p>\n\n\n\n

Inflation remains subdued and contained within the SARB’s target range, and interest rates are on a cutting cycle. <\/p>\n\n\n\n

The IMF and World Bank both projected higher economic growth for the country in 2025\u2014double the rate for 2024, albeit from a very low base\u2014with prospects for 2026 even higher.<\/p>\n\n\n\n

The group anticipate growth of 1.3% in 2025 (versus 0.6% in 2024), rising to 1.4% in 2026 and 1.5% in 2027.<\/p>\n\n\n\n

While these projected growth rates lag those of other emerging markets and Sub-Saharan Africa, they reflect a notable turning point for South Africa, which has been plagued by an energy crisis and collapsing infrastructure.<\/p>\n\n\n\n

It’s these problem areas that still attach a sizeable risk premium to the rand.<\/p>\n\n\n\n

Other fundamentals like high levels of government debt, reform roadblocks, high unemployment and anti-business policies keep it back from true PPP levels.<\/p>\n\n\n\n

Other estimates, including the widely referenced Big Mac Index, indicate that the rand remains undervalued and should be between R11.30 and R14.30 to the dollar on a PPP basis.<\/p>\n","protected":false},"excerpt":{"rendered":"

The South African rand has blasted through the R16.30 per dollar roadblock it hit in the past week of trade, and is marching towards its fairer value of R16\/$.<\/p>\n","protected":false},"author":10,"featured_media":663715,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[4068,3670],"class_list":["post-848650","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-dollar","tag-rand"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=848650"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848650\/revisions"}],"predecessor-version":[{"id":848652,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848650\/revisions\/848652"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/663715"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=848650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=848650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=848650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}