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Corporate and Investment Bank
Standard Bank Group
South Africa FX 07 May 2026

FX Monthly Chart Book

Shireen Darmalingam

  • The rand's performance in April was marked by volatility, driven primarily by global geopolitical developments rather than domestic fundamentals. The rand strengthened by roughly 2.4% against the US dollar over the month, and is currently at around R16.38/$ compared to R17.00 at the end of March. It traded in a wide range that reflected sharp swings in global risk sentiment. The RUB, HUF, BRL, CLP and KRW were among the best performing EM currencies, while the IDR, TRY, PHP, PEN and ARS were among the worst performing EM currencies.
  • The dominant driver of the rand's movements during the month was the Iran war and its impact on global energy markets. Early in April the rand came under pressure as fears of prolonged disruption to shipping through the Strait of Hormuz pushed Brent crude above $100/bbl. This worsened SA's terms of trade as a net oil importer and gave rise to new imported inflation and economic growth risks. These concerns triggered bouts of risk-off sentiment, temporary capital outflows from emerging-market assets and intermittent rand weakness, particularly when oil prices surged and the US dollar strengthened.
  • There was bit of a rally following the announcement of a temporary US-Iran ceasefire around mid-month, which eased fears of an immediate energy supply shock and caused oil prices to drop below $100/bbl. This triggered a broad risk-on move across emerging markets, saw foreign appetite return to South African bonds and equities, and pushed the rand more than 2% stronger on a single day, taking it to its best levels in nearly a month. However, this recovery proved fragile, as subsequent stalling of negotiations and renewed concerns over the Strait of Hormuz reintroduced volatility later in the month.
  • Global monetary policy and dollar dynamics also played a role. Expectations that the US Fed would keep interest rates restrictive for longer supported the dollar, which limited the rand's upside in April. At the same time, the South African Reserve Bank maintained a hawkish hold at 6.75% at the end of March, reaffirming its inflation-fighting credibility but acknowledging that higher fuel costs posed upside risks to inflation, which helped anchor the rand during risk-off episodes rather than drive sustained gains.
  • On the domestic front, developments were broadly supportive but secondary. However, the positives, such as an improved fiscal stance and still contained inflation were repeatedly overshadowed by external shocks. The government's decision to temporarily cut fuel levies in April to cushion the oil shock helped limit second-round inflation expectations but had little direct impact on currency direction. The near-term rand performance remains tightly linked to geopolitical developments and external financial conditions rather than domestic data alone.
  • We have kept our year-end target at R16.60/$ and R16.85 by the end of 2027. The rand's movements will continue to be driven to a large extent by developments around the war.
 

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