Outlook
A constructive bias remains for the rand in the near term as the SARB’s accommodative stance supports growth, inflation remains near target, and investor appetite for rand-denominated assets persists. If global risk sentiment stays firm and commodity prices hold, ZAR could push stronger versus USD and other majors. Conversely, a surprise shift in U.S. monetary policy or a deterioration in global risk appetite could cap gains or reverse them.
Key drivers
- SARB cut its repo rate (central bank's benchmark rate) to 6.75% in November 2025, signaling a shift toward supporting economic recovery.
- Strengthening rand on a rally in precious metals and improving domestic fundamentals, with increased global investor demand for rand-denominated bonds.
- Inflation outlook around 4.2% in 2026, with a 3% target, indicating leaves room for policy to stay supportive while price stability remains in focus.
- Positive global investor sentiment and higher yields on rand-denominated assets as part of a broader hunt for carry and relative value.
Range
ZAR/USD is at 0.063595 (90-day high), about 6.7% above its 3-month average of 0.059576, having traded in a wide 11.5% range from 0.057028 to 0.063595.
ZAR/EUR is at 0.053119 (90-day high), about 4.1% above its 3-month average of 0.051049, with a range from 0.049653 to 0.053119.
ZAR/GBP is at 0.046027 (90-day high), about 3.1% above its 3-month average of 0.044624, with a range from 0.043759 to 0.046027.
ZAR/JPY is 9.7413, about 4.9% above its 3-month average of 9.2904, with a range from 8.7612 to 9.8168.
What could change it
- Shifts in U.S. monetary policy or a material change in global risk appetite that strengthens or weakens the dollar.
- Domestic inflation surprises or a change in the SARB’s policy path beyond current expectations.
- Commodity price swings that affect SA terms of trade and investor risk perception.
- Changes in foreign investor demand for SA bonds or shifts in global funding conditions.
- Political or fiscal developments that alter SA’s credit outlook or growth trajectory.
