The rand just pulled off its biggest comeback in 16 years

The rand ended 2025 nearly 13% stronger against the US dollar, marking its biggest annual gain in 16 years as the greenback weakened broadly.

The risk-sensitive currency posted its first yearly rise against the dollar since 2019 and its largest increase since 2009, supported by South Africa’s improved fiscal performance, success in containing inflation and a surge in precious metals prices.

Gold and platinum, key South African exports, rallied strongly during the year.

In contrast, the US dollar slid about 9% against a basket of major currencies, heading for its worst annual performance in eight years on expectations of US Federal Reserve rate cuts, narrowing interest rate differentials, concerns over the US fiscal deficit and political uncertainty.

These factors fuelled demand for safe-haven assets, pushing gold past a record US$4 000 an ounce level in October and putting it on track for its strongest annual gain in more than four decades.

Analysts said that while South African assets benefited, they did not fully take advantage of the commodity boom cycle.

This was also the first full year under South Africa’s coalition government and was marked by disputes over the national budget and concerns over sweeping tariffs imposed by US President Donald Trump.

Resilient

Despite the turbulence, local assets proved resilient, further boosted by the country’s removal from the global financial crime watchdog’s “grey list”, a credit-rating upgrade by S&P and a formal change to the inflation target that lifted investor confidence.

Johann Els, chief economist at PSG Financial Services, said the rand is likely to benefit in 2026 from the same factors that boosted it in 2025. “I can see the rand continuing to strengthen in 2026, and I will not be surprised to see a 15 handle on the rand,” Els said.

Read: Green shoots are breaking through South Africa’s economic static

At 12.41pm, the rand traded at R16.59/$, a whisker away from Tuesday’s close.

On the JSE, the Top-40 index was last down 0.7%, but remained near record levels for the year, largely supported by mining stocks. South Africa’s benchmark 2035 government bond strengthened, with the yield falling two basis points to 8.205%.  — Sfundo Parakozov and Alessandro Parodi, (c) 2025 Reuters