Rand pops champagne with a sizzling start to 2026
The local currency gained almost 13% against the dollar in 2025.
Image: Freepik
The rand started 2026 in good cheer, having ended the previous year with a 12.4% lift against the dollar.
As of noon, the currency was at R16.50 – albeit against a dollar that has weakened substantially over the past 12 months before clawing back some value.
Wichard Cilliers, head of Market Risk at TreasuryONE, noted on New Year’s Eve that, despite the firmer dollar, the rand remained strong, trading around R16.57 at one point Tuesday night.
As of Wednesday morning, the local currency was holding steady at around the R16.60 level in muted trade as markets looked to close early for the New Year holiday.
According to Daily Forex, speculators will be placing bets as to whether the currency can hold its own in the new year after a solid December.
The website pointed out that, as of December 1, the rand was around R17.15 to the greenback before significantly strengthening.
“While some argue about the reasons for an emboldened move to long-term lows by the USD/ZAR, it must be pointed out that the South African rand is not the only emerging market currency that has shown solid strength,” the website said.
While the currency has certainly benefited from stronger commodity prices, Daily Forex said there’s more to the story.
“South Africa has done a good job of starting to become more transparent regarding corruption and spending irregularities from various sectors in the nation,” Daily Forex said.
The website also noted that the Government of National Unity – in place for 18 months – continues to produce positive sentiment from investors.
However, the currency remains susceptible to a reversal of fortunes and remains volatile, Daily Forex said.
“All it takes is one moment of stupidity from bad policy to scare financial institutions,” it said.
Daily Forex added that the stupidity, “it should be pointed out, could come from outside – like an ill-timed spat of rhetoric from the US White House. Or domestically – like a bad policy decision which affects businesses’ ability to practice free enterprise and not suffer from cumbersome regulations.”
Bloomberg late last year reported that a gauge of expected volatility for the rand versus the dollar was at its lowest level since the turn of the century.
This, it said, suggested that traders expect little upheaval for the South African currency as the year draws to a close.
The rand has long been one of the most volatile emerging-market currencies.
Over several decades, it has been sensitive to changes in global risk appetite, commodity cycles, domestic politics and interest-rate differentials.
For example, the rand has ranged between under R12 and almost R20 to the dollar in the past seven years.
Conceivably, the currency could break much lower, Daily Forex added.
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