{"id":849274,"date":"2026-01-29T13:13:02","date_gmt":"2026-01-29T11:13:02","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=849274"},"modified":"2026-01-29T13:13:08","modified_gmt":"2026-01-29T11:13:08","slug":"rand-hits-the-sweet-spot","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/849274\/rand-hits-the-sweet-spot\/","title":{"rendered":"Rand hits the sweet spot"},"content":{"rendered":"\n

South Africa’s rand continued its winning streak on Thursday, strengthening further against the US dollar, and landing in the ‘fair value’ range set by markets.<\/p>\n\n\n\n

Analysis by boutique wealth management group Anchor shows that at around R15.70 against the US dollar, the rand has entered into the modelled fair value range of R13.73 to R15.73.<\/p>\n\n\n\n

The fair value range is where the rand is seen as reflecting its true value, rather than being over- or undervalued due to market sentiment tied to its risk premium.<\/p>\n\n\n\n

It is also seen as the value reflective of purchasing power parity, which measures the purchasing power of currencies when buying a similar basket of goods.<\/p>\n\n\n\n

The Big Mac Index is a simple and familiar measure of PPP, but various measures are used in modelling across different banks, analytics groups and finance groups.<\/p>\n\n\n\n

Like Anchor;s modelling, the “fair value” of the rand has been pegged at between R13\/$ (Big Mac Index) and around R16\/$ (Investec’s modelling)\u2014and the rand’s current levels put it neatly in range.<\/p>\n\n\n\n

The rand broke through the psychological R15.70\/$ level on Wednesday, and traded as low as R15.65\/$ on Thursday ahead of the Reserve Bank’s interest rate decision.<\/p>\n\n\n\n

Anchor noted that the rand has strengthened by around 5.5% against the dollar this year so far and could settle and sustain in the fair-value band.<\/p>\n\n\n\n

The currency’s appreciation has been driven primarily by broad-based US dollar weakness, supported by surging commodity prices\u2014notably gold and platinum, up 22.1% and 28.3% YTD, respectively.<\/p>\n\n\n\n

To a lesser extent, but not discounted, the improving investor sentiment towards South Africa has helped things along.<\/p>\n\n\n\n

“Record gold and platinum prices, heightened US policy uncertainty, and growing expectations of further US Federal Reserve rate cuts have weighed on the US currency,” Anchor said.<\/p>\n\n\n\n

The US Fed held rates on Wednesday, in line with market expectations; however, the longer-term view is that cuts will happen, just slowly.<\/p>\n\n\n\n

Similar sentiments have been expressed around the South African Reserve Bank and its cutting trajectory, with economists anticipating a rate cut either today or at the next meeting in March.<\/p>\n\n\n\n

The broader view is that South Africa will see 50bps of cuts in 2026\u2014though there is no consensus on the pace.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

Dollar weakness in the driving seat<\/h2>\n\n\n\n

The US Dollar Index, which tracks the value of the greenback against a basket of six major global currencies, has declined by ~11% YoY to 28 January 2026 and was down 9.4% in 2025. <\/p>\n\n\n\n

This comes as markets and investors reassess the sustainability of US growth, the inflationary implications of the Trump regime\u2019s on-again, off-again tariffs, Trump\u2019s erratic behaviour on the global stage, and the likelihood that US interest rates have peaked, it said.<\/p>\n\n\n\n

Markets have taken note of Trump’s aggression towards allies, including a strange fixation on acquiring Greenland.<\/p>\n\n\n\n

“Trump’s cognitive functions and health have also been a source of concern, and an incoherent, rambling speech at the World Economic Forum in Davos was widely ridiculed,” Anchor said.<\/p>\n\n\n\n

More worrying, however, has been the Trump administration’s targeting of the Fed, with the “startling revelation” that Fed Chair Jerome Powell is facing a criminal investigation.<\/p>\n\n\n\n

This has amplified an increasingly hostile administration towards the Fed.<\/p>\n\n\n\n

“Some commentators have described this as an effort to undermine the central bank\u2019s independence,” Anchor said.<\/p>\n\n\n\n

In addition to these misgivings, civil unrest, sparked by two highly publicised fatal shootings by US federal agents, has added to perceptions of policy unpredictability. <\/p>\n\n\n\n

“Against this backdrop, investors have increasingly sought alternative safe havens, pushing gold prices to record highs,” Anchor said.<\/p>\n\n\n\n

While the dollar has been a key driver of the stronger rand, Anchor said that domestic developments have also become increasingly supportive.<\/p>\n\n\n\n

Lower oil prices (-18.5% in 2025) and elevated gold and platinum exports have materially improved SA\u2019s terms of trade, boosting the fiscus. <\/p>\n\n\n\n

SA\u2019s November trade surplus rose to R37.7 billion, the largest since March 2022, reflecting a strong export performance. <\/p>\n\n\n\n

Improved electricity supply, better logistics outcomes\u2014improved rail performance, increased container volumes, and stronger public-private collaboration\u2014and the resilience of the Government of National Unity (GNU) have also helped lift business confidence.<\/p>\n\n\n\n

The positive news is that the conditions are likely to continue, with the caveat that the swings might not be as pronounced.<\/p>\n\n\n\n

“While the recent moves in the currency have been sharp, we believe that the underlying trend may well continue during 2026, albeit at a more measured pace,” Anchor said<\/p>\n\n\n\n

“With the rand trading closer to its fair value, it has also become more vulnerable to adverse shocks, which are inherently difficult to predict.”<\/p>\n\n\n\n

The group warned that US trade and foreign-policy developments under the Trump administration, along with South Africa’s 2026 Local Government Elections, remain potential sources of volatility.<\/p>\n\n\n\n

“Any negative surprises on these fronts could have a more pronounced impact on the local currency,” it said.<\/p>\n","protected":false},"excerpt":{"rendered":"

The rand’s winning streak has seen the currency push past major roadblocks, trading at a place it hasn’t been in years\u2014fair value.<\/p>\n","protected":false},"author":10,"featured_media":817333,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[24466,3559,1498,3670],"class_list":["post-849274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-anchor","tag-big-mac-index","tag-investec","tag-rand"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/849274","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=849274"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/849274\/revisions"}],"predecessor-version":[{"id":849285,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/849274\/revisions\/849285"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/817333"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=849274"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=849274"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=849274"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}