The rand strengthened to below R16/$ for the first time in almost four years on Monday, 26 January, following the successful footsteps of the gold price, which breached $5 000 per fine ounce in the morning. In volatile economic times, with geopolitics changing from day to day, this is good news for South Africa, although the strong rand is more a consequence of a weaker dollar and of stronger metal prices, including gold. Sanisha Packirisamy, chief economist at Momentum Investment, says the rand breaching R16.00 to the US dollar reflects a mix of global and local dynamics, including a weaker US dollar pressured by de-dollarisation trends (echoed in robust central bank gold buying) and soaring precious metal prices.
She says a favourable commodity price mix supported the rand as a high-beta emerging market currency. In addition, other factors supporting the rand included: “While structural challenges like fiscal pressures, logistics, and water issues persist, these tailwinds have propelled the rand’s rally.” Bianca Botes, director at Citadel Global, says the rand already extended its winning streak last week, rallying to levels as strong as R16.12/$. “A confluence of factors has aligned in the local currency’s favour over the past weeks: record gold prices, improved fiscal metrics, a credible central bank and persistent dollar weakness.
“The question now is whether the rand can stay there after breaching the psychological R16.00/$ mark.” Botes also points out that dollar weakness persists. “The US dollar Index (DXY) has fallen to 98.5, down roughly 10% from early-2025 highs of near 110. “Beyond Greenland, concerns over US Federal Reserve (Fed) independence persist after the criminal investigation into Fed Chair Jerome Powell.
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“Former Fed Chairs Ben Bernanke, Alan Greenspan and Janet Yellen condemned the probe as an “unprecedented attempt” to undermine the central bank. The Fed’s Federal Open Market Committee (FOMC) meets on 27 and 28 January and is expected to hold rates steady, but its tone on future policy will be closely watched.” Botes points out that these factors combine to create a compelling short-term case for further rand strength. “Technical indicators support the view that the $/R rate is trading below its 50-day, 100-day and 200-day moving averages. Momentum remains intact.”
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