Turning 65 in style – rand hits strongest level in years

The local currency was near levels last seen in 2022, as markets responded positively to government’s commitment to stabilising debt and narrowing the budget deficit. The rand pushed to its strongest level in years on Wednesday, buoyed by optimism after the2026 Budgetsignalled that South Africa’s long-rising public debt burden may finally be nearing its peak. A credible path to debt stabilisation, easing debt-service pressures, and a calmer political backdrop have combined to give the rand, which turns 65 this year, fresh momentum.

The local currency traded below R16 against the US dollar on Thursday morning – at one stage hitting R15.85 – near levels last seen in 2022, as markets responded positively to government’s commitment to stabilising debt and narrowing the budget deficit. Bianca Botes, director at Citadel Global, said the rand opened the day on firmer footing, although within its recent range. The move followed abroadly constructive reactionto Finance Minister Enoch Godongwana’s budget presentation, where he indicated that public debt is expected to stabilise for the first time in 17 years.

According to the 2026 Budget, the debt-to-gross domestic product ratio is projected to peak at 78.9% in the 2025 to 2026 fiscal year. While this is marginally higher than earlier projections due to weaker nominal growth and increased borrowing, debt-service costs as a share of revenue are forecast to ease to 20.2% by 2028 to 2029. Nolan Wapenaar, head of fixed income and co-chief investment officer at Anchor, described the budget as “largely neutral”, but said confirmation of the debt peak carried important signalling value for investors.

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“The budget is seen as confirming that the country is staying the course and will be bringing its debt under control,” Wapenaar said. Wapenaar noted thatdebt peaking this yearwas “meaningful and comforting to the market”. Although much of the fiscal trajectory had already been priced in, Wapenaar said markets reacted positively to the reaffirmation.

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