According to Rueter's economist, this is the weakest the rand has been since late April 2024.
Image: Picture Henk Kruger / Independent Newspapers
The rand is nearing a nine-month low as the dollar continues to remain buoyant but will the rand in 2025 continue to be a weak currency and is this such a bad thing?
According to Andrew Bahlmann, an advisor at Deal Leaders International, the rand will remain weak against the dollar if government interference continues in 2025.
The rand was trading at around R19.18 on Monday at 11am against the dollar.
The ZAR was trading at around R19,62 to the euro and around R23,29 to the pound.
According to Reuter's economists, this is the weakest the rand has been since late April 2024.
The rand’s weakness is not going to change in 2025 and according to Bahlmann, there is little debate about the rand's reputation as a weak currency globally.
He noted that decades of structural economic challenges, political uncertainty and a volatile global market have entrenched this perception.
The advisor said that a closer look at recent currency movements revealed that over the past year, while the dollar index (DXY) has strengthened 6.5% against a basket of global currencies, the rand has weakened only 2% against the dollar.
“Historically, the rand has depreciated at an average rate of 8% per year since 1980, and notwithstanding recent strength I expect this weakness to continue as South Africa’s fundamentals of state interference remain largely unchanged,” he emphasised.
“This long-term trajectory underscores the currency’s susceptibility to global shifts and domestic headwinds.”
Moreover, Bahlmann does not think the rand will gain strength under the new Trump administration if we examine the four years when he was in office.
“US policy under Trump was characterised by measures fuelling inflationary pressures and influenced expectations of fewer rate cuts, thereby reinforcing dollar strength. Typically, this dynamic would exert even greater pressure on emerging market currencies like the rand,” he explained.
Bahlmann noted that the rand’s lack of buoyancy against the dollar is not all bad news and added that the rand is in fact relatively stable amid global volatility.
This strength could represent a unique window of opportunity for international investors, he said.
“The currency’s historically low valuation, coupled with modest recent resilience, makes South African assets attractively priced for global players seeking value,” Bahlmann maintained.
“Moreover, sectors tied to exports, such as mining, manufacturing and agriculture, could benefit from favourable exchange rates, potentially boosting investor confidence.”
Lastly, he said that foreign investors could leverage the weak rand to acquire assets at a discount, while South African companies gain access to capital and expertise, creating a mutually beneficial dynamic.
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