{"id":851119,"date":"2026-02-16T16:00:00","date_gmt":"2026-02-16T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=851119"},"modified":"2026-02-16T15:54:27","modified_gmt":"2026-02-16T13:54:27","slug":"another-big-turn-for-the-rand","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/851119\/another-big-turn-for-the-rand\/","title":{"rendered":"Another big turn for the rand"},"content":{"rendered":"\n

South Africa’s rand has seen another bout of strength against the US dollar, moving back below R16.00\/$ from around R16.30\/$ at the start of the month.<\/p>\n\n\n\n

The main driver of the rand’s renewed strength is the return of risk-on sentiment in global markets following a correction triggered by the United States’ new Federal Reserve Chair nomination.<\/p>\n\n\n\n

Markets fell at the end of January and the start of February as markets contemplated US President Donald Trump’s nominee for Fed Chair, Kevin Warsh.<\/p>\n\n\n\n

Warsh was initially expected to be hawkish on US rate cuts, but has since come out as more dovish than those early impressions suggested.<\/p>\n\n\n\n

According to Investec Chief Economist, Annabel Bishop, as market fears have subsided, so too has risk sentiment, bringing a stronger rand and a weaker dollar.<\/p>\n\n\n\n

“Warsh has recently spoken supportively around rate cuts, in particular noting AI will bring ‘the most productivity-enhancing wave of our lifetimes \u2014 past, present and future’,” Bishop said.<\/p>\n\n\n\n

“In turn, he believes AI could be ‘structurally disinflationary’, with markets seeing some relief.”<\/p>\n\n\n\n

Because of this position, market expectations for US interest rate cuts have consequently lifted, relieving the spate of risk-off at the start of the month, with the rand returning to R15.96\/$, from R16.31\/$ at the start of the month, when the USD index spiked higher.<\/p>\n\n\n\n

However, the rand’s strength isn’t solely being driven by a weaker dollar, which was certainly the case in 2025. The local unit is seeing broad gains, especially on a trade-weighted basis.<\/p>\n\n\n\n

A trade-weighted basis measures a currency’s value as a weighted average determined by the volume of trade with each partner.<\/p>\n\n\n\n

Using this metric, the rand has gained 7.7% y\/yon average against the currencies of key trading partners.<\/p>\n\n\n\n

Specifically, the rand is up 1.4% y\/y against the euro, up 5.3% y\/y against the pound, up 15.5% y\/y against the US dollar, and up around 15% y\/y against the yuan\u2014all this year so far.<\/p>\n\n\n\n

Things are looking up for South Africa<\/h2>\n\n\n\n
\"\"<\/a>
Investec Chief Economist, Annabel Bishop<\/figcaption><\/figure>\n\n\n\n

Bishop noted that South Africa is enjoying a surge of positivity, and expectations remain on the upside for the 2026 Budget, which will be presented next week.<\/p>\n\n\n\n

“Investor sentiment has benefited from the credit rating upgrade from S&P with a still positive outlook, removal from the greylist, low inflation and low interest rates on the drop in the inflation target to 3.0% y\/y,” she said.<\/p>\n\n\n\n

South Africa’s fundamentals are improving, and there has been an overall reduction in political risk over two years, she added.<\/p>\n\n\n\n

This also includes “relief on structural impediments, including the halt to load shedding”, as well as a commitment from President Cyril Ramaphosa to end load reduction in 2027.<\/p>\n\n\n\n

Bishop said that numerous economic indicators are pointing to an acceleration in economic growth this year compared with last year\u2019s growth, as both the financial markets and the domestic economic environment have increasingly found themselves in a sweet spot.<\/p>\n\n\n\n

“With the Budget next week, there is scope for some further rand strength if borrowings as a percentage of GDP are seen lower than projected, and there is a chance now of some improvement in the fiscal outlook,” she said.<\/p>\n\n\n\n

However, there is a caveat. The improved outlook only stands if the government doesn’t overspend again<\/strong>.<\/p>\n\n\n\n

“The budget deficit so far, at -R243 billion for the first nine months of 2025\/26, would see a full year outcome of -R327 billion if it persists at the current mild pace,” Bishop said.<\/p>\n\n\n\n

This would be below the -R353 billion budgeted in the MTBPS, representing a R26 billion recovery.<\/p>\n\n\n\n

However, whether the government will capitalise on this position and carry the savings forward “depends on additional spending”.<\/p>\n\n\n\n

“While good news on South Africa’s state finances has largely been discounted (in the rand), markets will be watching the fiscal ratios,” Bishop said.<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s rand has seen another bout of strength against the US dollar, reversing the losses seen at the start of the month.<\/p>\n","protected":false},"author":10,"featured_media":851128,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[19853,3670],"class_list":["post-851119","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-annabel-bishop","tag-rand"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/851119","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=851119"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/851119\/revisions"}],"predecessor-version":[{"id":851136,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/851119\/revisions\/851136"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/851128"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=851119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=851119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=851119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}