{"id":848700,"date":"2026-01-25T07:00:00","date_gmt":"2026-01-25T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=848700"},"modified":"2026-01-25T07:12:17","modified_gmt":"2026-01-25T05:12:17","slug":"reality-check-for-the-rand","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/848700\/reality-check-for-the-rand\/","title":{"rendered":"Reality check for the rand"},"content":{"rendered":"\n

The rand is on a hot streak and is close to crossing the R16.00\/$ threshold, but South Africans should not expect this performance to continue.<\/p>\n\n\n\n

Bianca Botes, Director at Citadel Global, said that the rand’s recent performance has reached levels as strong as R16.12\/$. <\/p>\n\n\n\n

Gold has been a fundamental driver, with the gold price reaching a record high of $4,888\/ounce. This marked a 67% gain from 2025 and added another 7% year to date. <\/p>\n\n\n\n

Safe-haven asset demand has recently intensified over tensions between the US and Europe over Greenland. <\/p>\n\n\n\n

Donald Trump recently threatened 10% tariffs on eight European nations, which would rise to 25% in June in the absence of a deal, triggering what traders are calling the \u201cSell America\u201d trade.<\/p>\n\n\n\n

As a result, markets swooped on gold, with financial services giant HSBC predicting it could reach $5,000 in the first half of 2026.<\/p>\n\n\n\n

This is good news for the rand, as higher gold prices directly translate into improved terms of trade. <\/p>\n\n\n\n

The country\u2019s November trade surplus widened to R37.7 billion, which was the most significant value since March 2022, boosted by precious metal exports.<\/p>\n\n\n\n

Other improvements include the S&P\u2019s November upgrade of South Africa\u2019s sovereign debt rating to BB\u00a0– the first upgrade in two decades.<\/p>\n\n\n\n

The EU also recently removed South Africa from its high-risk jurisdiction list, followed by its removal from the Financial Action Task Force (FATF) grey list in October 2025. <\/p>\n\n\n\n

“These delistings reduce compliance friction for international transactions and signal the institutional progress that offshore investors have been watching for,” said Botes. <\/p>\n\n\n\n

South African Reserve Bank (SARB) Governor Lesetja Kganyago reinforced the positive narrative at Davos, expressing confidence that SA\u2019s 3% inflation target will be achieved in 2026, ahead of the 2027 goal. <\/p>\n\n\n\n

With inflation at a 21-year low of 3.2% in 2025, markets are pricing in a 25-basis-point cut when the SARB’s Monetary Policy Committee (MPC) meets on 29 January.<\/p>\n\n\n\n

While the rand has also been a strong performer, the dollar has also weakened amid the Greenland fiasco and concerns about the US Federal Reserve’s independence. <\/p>\n\n\n\n

Not out of the woods<\/h2>\n\n\n
\n
\"\"<\/a>
Bianca Botes from Citadel<\/figcaption><\/figure><\/div>\n\n\n

While the rand has performed well recently, Botes warned that a sustained price below R16.00\/$ faces structural headwinds that warrant caution.<\/p>\n\n\n\n

This is partly due to South Africa’s growth looking incredibly tepid, with the OECD expecting GDP to reach just 1.3%. <\/p>\n\n\n\n

“An economy growing at barely above ‘stall speed’ has limited capacity to absorb currency strength without damaging export competitiveness,” said Botes. <\/p>\n\n\n\n

Moreover, there are concerns that South Africa will not be part of the US African Growth and Opportunity Act (AGOA) <\/p>\n\n\n\n

The US House passed its extension, which gives African countries duty-free access to the US, but it still requires Senate approval. This comes at a point where South African-American relations are strained. <\/p>\n\n\n\n

While gold has also been a strong performer in 2025, there are question marks over the resource’s value. <\/p>\n\n\n\n

“A correction in the price of bullion \u2013 whether triggered by profit-taking, a de-escalation in geopolitical tensions, or a hawkish Fed pivot \u2013 would remove a key pillar of rand support,” said Botes. <\/p>\n\n\n\n

“Given how central gold has been to the current rand rally, any meaningful pullback would likely drag the currency weaker.” <\/p>\n\n\n\n

Finally, the rand remains a high-beta (more volatile than the overall market) emerging market currency. Global risk appetite can change quickly, which can impact the rand. <\/p>\n\n\n\n

Over the last year, the rand-to-dollar exchange rate ranged from R16.12\/$ to R19.93\/$, highlighting its instability. <\/p>\n\n\n\n

Most analyst forecasts cluster around R16.30\/$ to R17.10\/$ as the likely trading range over the coming months. <\/p>\n\n\n\n

The balance of risks tilts toward a stronger rand for longer, but a range from mid-to-high R16.00\/$ to low R17.00\/$ represents a more sustainable equilibrium than sub-R16.00\/$ levels.<\/p>\n\n\n\n

“For the week ahead, the FOMC and SARB decisions will set the tone. A dovish Fed combined with an SARB cut could provide the catalyst for a R16.00\/$ test,” said Botes. <\/p>\n\n\n\n

“Equally, any hawkish surprise or escalation in geopolitical tensions could trigger a sharp reversal given stretched positioning.”<\/p>\n\n\n\n

“The EU high-risk list removal takes effect on 29 January, coinciding with the SARB\u2019s MPC decision \u2013 a date that could prove pivotal for sentiment.”<\/p>\n","protected":false},"excerpt":{"rendered":"

The rand has been on a winning streak, but the currency faces many challenges to remain below R16.00\/$. <\/p>\n","protected":false},"author":95,"featured_media":772520,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[11282],"class_list":["post-848700","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-citadel"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848700","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\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=848700"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848700\/revisions"}],"predecessor-version":[{"id":848743,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/848700\/revisions\/848743"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/772520"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=848700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=848700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=848700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}