Outlook
These developments suggest a positive outlook for the ZAR, driven by supportive monetary policy, investor confidence, and favorable inflation trends. The rand has strengthened to multi-quarter highs around the 16.5 per USD area, helped by a SARB rate cut and improving domestic fundamentals. If this environment persists and global risk appetite stays firm, the rand could maintain a firm footing against major peers, though moves will remain sensitive to global liquidity, commodity prices, and any surprise in inflation or policy signals.
Key drivers
- SARB cut to 6.75% in November 2025, signaling a shift toward a more accommodative policy stance to support economic recovery. (repo rate is the policy rate at which the central bank lends to banks)
- Strengthening rand on the back of a rally in precious metals and improving domestic fundamentals.
- Global funds increasing allocations to rand-denominated bonds due to higher yields amid stabilizing inflation and a favorable rate environment.
- Inflation outlook around 4.2% in 2026 with the SARB’s 3% target, underpinning price stability and investor confidence.
Range
ZAR/USD: 90-day high near 0.062008, 3-month average 0.059257, range 0.057028–0.062008.
ZAR/EUR: 90-day high near 0.052764, 3-month average 0.050874, range 0.049653–0.052764.
ZAR/GBP: 90-day high near 0.045936, 3-month average 0.044501, range 0.043514–0.045936.
ZAR/JPY: 90-day high near 9.8302, 3-month average 9.2424, range 8.7612–9.8302.
What could change it
- Unexpected policy moves or hawkish/slightly tighter commentary from the SARB that shifts the rate path.
- Inflation surprises (higher than 4.2% for 2026) requiring tighter policy or altering the inflation/growth balance.
- Changes in global risk sentiment or commodity prices, particularly precious metals, affecting risk appetite for EM currencies.
- Shifts in global liquidity, stronger USD, or reduced demand for emerging-market bonds could weigh on the rand.
