There was a lot to like from the medium-term budget policy statement. We’re not out of the woods, but key data points are trending in the right direction.
The market liked it. The rand liked it a lot. At the time of writing, the currency was below R17/$ for the first time since early 2023.
Now, we South Africans are a funny bunch about our currency; we take its fluctuations very seriously. Whenever I post on social media about an improved level, I get hate in my inbox from a few weird souls.
One regular response to a stronger rand is that it is not our currency that is stronger, but that the dollar is weaker — and often it is exactly that. But recent rand strength has had less to do with the dollar and more to do with foreigners bringing money into South Africa. For them to do so, they need to sell dollars and buy rand, and if there are more rand buyers than sellers, the currency strengthens.
We have a few things in our favour at the moment that are resulting in increased rand buying.
One is our bonds. Stanlib chief economist Kevin Lings tweeted recently: “During the two months from Aug to Sep 2025 foreign investors bought a total of $4.45bn of SA government bonds, the largest two months of foreign purchases since at least 1994.” Our bond yields are attractive and the risk of default is zero.
The second factor is precious metal prices. With gold just off record highs and platinum group metals once again rising, local mining companies earn more dollars per ounce — dollars that they then turn into rand, making the currency stronger. This also, in time, means higher tax receipts for the South African Revenue Service, helping the budget.
The third is a move away from the dollar since Donald Trump became US president and started imposing random tariffs and tearing down international relations. The global economy is shifting, and while it is happening slowly and we’re far from the front of the list, we’re definitely getting some attention.
Given that in April, after Trump’s “liberation day” tariff announcement, the rand was just below R20/$, the question is: how much stronger can it get?
I’ve asked a few of my smarter currency friends and chart experts, and there is absolutely no consensus. Some say the trend is over. One has suggested R12.50 is on the cards. My target for next year is in the mid-R15s.
To those saying this is crazy, here’s a fun stat from 2001. The rand hit R13.84/$ in December that year. My wife and I panicked and rushed out to buy white appliances, fearing we’d never be able to afford them again.
Yet three years later, in December 2004, the rand was below R5.60/$ on the back of a huge boom and strong GDP growth locally.
The point is that while the rand may be a one-way weakening bet over the long term, in short time frames it can strengthen — and strengthen a lot.
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