South Africa’s rand closed 2025 on a strong footing, gaining nearly 13% against the United States dollar in its best annual performance in more than 16 years, as a broad weakening of the greenback combined with improving domestic fundamentals and a global commodities rally.
The risk-sensitive rand posted its first full-year appreciation against the dollar since 2019 and its largest annual gain since 2009, underpinned by South Africa’s improved fiscal outlook, effective inflation containment and renewed investor confidence in local assets. Analysts noted that the currency benefited significantly from a surge in precious metal prices, particularly gold and platinum, which are among South Africa’s most important exports.
Gold prices surged past the $4,000-an-ounce mark in October, driven by rising demand for safe-haven assets amid growing uncertainty in global markets. The rally has put gold on track for its strongest annual gain in over four decades, providing a crucial boost to mining-linked economies such as South Africa.
In contrast, the U.S. dollar endured a difficult year, falling about 9% against a basket of major global currencies and recording its weakest annual performance in eight years. The slide was driven by expectations of U.S. Federal Reserve interest rate cuts, narrowing interest rate differentials, mounting concerns over the U.S. fiscal deficit and heightened political uncertainty, all of which shifted global capital flows away from the dollar.
Despite the favourable global commodities cycle, analysts observed that South African assets did not fully capitalise on the upswing. The year marked the first full term of South Africa’s coalition government and was characterised by budget disputes, policy uncertainty and concerns over sweeping U.S. tariffs imposed by President Donald Trump, which added pressure to emerging markets.
Even so, South Africa’s financial markets showed notable resilience. Investor sentiment improved following the country’s removal from the Financial Action Task Force’s “grey list,” a sovereign credit rating upgrade by S&P Global Ratings and a formal adjustment to the inflation target framework, moves widely seen as strengthening policy credibility and long-term economic stability.
Johann Els, chief economist at PSG Financial Services, said the factors that supported the rand in 2025 are likely to extend into 2026. He noted that continued fiscal discipline, easing global monetary conditions and stable inflation could further strengthen the currency. Els added that he would not be surprised to see the rand trade in the 15-per-dollar range in the year ahead.
By mid-morning trade, the rand was quoted at 16.5925 to the dollar, close to its previous session’s close. On the Johannesburg Stock Exchange, the Top-40 index edged down 0.7% on the day but remained near record highs for the year, supported largely by strong performances from mining stocks. South Africa’s benchmark 2035 government bond also firmed, with yields easing to 8.205%, reflecting sustained demand for local debt.
