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Standard Bank Group
South Africa FX 15 January 2026

FX Monthly Chart Book

Shireen Darmalingam

  • The rand was notably stronger in December 2025, ending the year as the best-performing emerging market currency against the dollar. The local exchange rate kicked off the month at around R17.15/$ and appreciated to R16.60/$ by year-end, reflecting a roughly 3.3% monthly appreciation, and contributing to a 14% gain over the full year. It reached a high of R17.16/$ and low of R16.53/$ in December. The rand also gained against the euro (2.1%) and the pound (1.6%) in December. Emerging-market currencies were mixed against the dollar in December; the ZAR, CLP, THB, KRW and MYR were amongst the best-performing EM currencies, and the BRL, RUB, TRY, COP, and INR were amongst the worst-performing EM currencies.
  • Several factors underpinned this rally in December. Dollar weakness, driven by a US Fed rate cut and dovish Fed commentary, provided an external tailwind. On the domestic front, the SARB’s decision to cut the repo rate late in November and formally adopt a 3% inflation target bolstered investor confidence. Sentiment was also supported by SA’s removal from the FATF grey list, an upgrade of its foreign-currency sovereign credit rating by S&P ratings agency, and improved fiscal metrics, as outlined in the Medium-Term Budget Policy Statement (MTBPS). Rising commodity prices, particularly of gold and platinum group metals, also provided support to the strength of the rand towards year-end.
  • The broader macroeconomic picture remained supportive in December, barring the still strained PMI which too weighed on sentiment. However, inflows into the bond market increased, further underpinning the currency’s strength in December. Overall, the rand consolidated its end?of?year gains amid a favourable mix of global dollar softness, domestic policy credibility, improved investor sentiment, and resilience in commodity markets.
  • The 13% increase in the terms of trade over the course of 2025 strengthened our fair-value estimate of the rand by around R1.80-R2.00/$ (all else being equal). We currently estimate the fair value at R16.00/$ to R16.50/$. There is some scope for the rand to strengthen further without a further improvement in fundamentals (given that the rand is not yet at the strongest end of our fair-value range). The key positive risks to our currency forecasts include an increase in capital inflows, especially if SA’s growth improves credibly and sustainably, and further dollar weakness.
  • We see the rand averaging R16.70/$, R19.79/€ and R22.46/£ in 2026. The rand is expected to end the year at R16.90/$, and R17.20/$ in 2027.
 

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