South African Rand Recovers

The South African rand depreciated more than 1% to around 15.9 per USD, pressured by retreating gold prices and a firmer US dollar.

However, the currency remained close to June 2022-highs, amid positive domestic fundamentals and elevated prices for commodities.

Meanwhile, the South African Reserve Bank left the benchmark interest rate at 6.75%, pausing after a 25 bps rate cut in November, signaling a balanced stance on global risks and confidence in the current inflation trajectory.

The decision followed a downward revision to the 2026 inflation forecast to 3.3%, closer to the new 3% target amid an improved inflation outlook.

The South African rand strengthened slightly to trade around 15.7 per USD, the highest since May 2022, as traders assessed the latest monetary policy move.

The South African Reserve Bank maintained the benchmark interest rate at 6.75%, pausing after a 25bps rate cut in November, as widely anticipated by analysts.

The South African rand continued to strengthen to reach 16 per USD, the highest since June 2022, driven by record prices for key exports including gold, silver, platinum, and palladium.

The currency has risen over 3% against the dollar since the start of 2026, building on strong gains from 2025, benefiting from lingering concerns over the US economy under President Trump administration and positive domestic developments.

Meanwhile, the South African Reserve Bank’s first rate-setting meeting of 2026 will be closely watched for signals on monetary policy.

The central bank is expected to make its interest rate decision on Thursday, 29 January, a day after the US Federal Reserve, which is widely expected to hold rates steady.

Markets anticipate that the SARB will also keep rates unchanged following a cut in November 2025, with a further reduction possible in March.

A Reuters poll showed 18 of 26 analysts foresee steady rates, while eight expect a 25 basis point cut to 6.5%.

The South African rand extended its rally to trade around 16.2 per USD, reaching the highest since June 2022, benefiting from record-high precious metals prices, particularly gold and silver.

Meanwhile, economic data showed that South African inflation remains under control, which should give the central bank room to cut interest rates this year.

Inflation was marginally higher at 3.6% in January, but remained within the SARB’s 1-percentage-point tolerance band around its new 3% target.

The 2025 average inflation rate hit a 21-year low of 3.2%, below the central bank’s 3.3% forecast. While a benign inflation outlook leaves scope for a rate cut at the upcoming meeting later this month, analysts remain divided, with the balance of factors suggesting the South African Reserve Bank is more likely to keep interest rates unchanged.

The SARB will ultimately weigh both domestic inflation conditions and global risks before taking the next step in the rate-cutting cycle.

The South African Rand touched 16.29 against the USD, the highest since August 2022.

Over the past 4 weeks, US Dollar South African Rand lost 2.42%, and in the last 12 months, it decreased 11.76%.

The South African rand strengthened to around 16.3 per USD, staying near its highest level since August 2022, buoyed by rising gold and other precious metal prices.

Traders also weighed December’s inflation data and its potential impact on the central bank’s next moves.

Annual inflation inched up to 3.6% from 3.5%, in line with expectations, remaining well within the SARB’s 1-percentage-point tolerance band around its new 3% target.

The 2025 average inflation rate hit a 21-year low of 3.2%, below the central bank’s 3.3% forecast, raising the possibility of a rate cut on January 29.

SARB Governor Lesetja Kganyago told Bloomberg TV at Davos that inflation is expected to meet the 3% target in 2026, with prices remaining broadly stable.