The rand has started 2026 on the front foot, having ended 2025 nearly 13% stronger against the US dollar, marking its biggest annual gain in 16 years.
The local unit is a risk-sensitive currency, but still managed to post its first yearly rise against the dollar since 2019 and its largest increase since 2009.
This was supported by South Africa’s improved fiscal performance, success in containing inflation and a surge in precious-metal prices.
Gold and platinum, key South African exports, also rallied strongly during the year.
By contrast, the US dollar slid about 9% against a basket of major currencies, heading for its worst annual performance in eight years.
This was due to expectations of US Federal Reserve rate cuts, narrowing interest-rate differentials, concerns over the US fiscal deficit, and political uncertainty raised by the second Trump administration.
These factors fuelled demand for safe-haven assets, pushing gold past a record $4,000-an-ounce level in October and putting it on track for its strongest annual gain in more than four decades.
Analysts noted that while South African assets benefited, they did not take full advantage of the commodity boom cycle.
2025 was also the first full year under South Africa’s coalition government, marked by disputes over the national budget and concerns about sweeping US tariffs imposed by US President Donald Trump.
Despite the turbulence, local assets proved resilient, further boosted by the country’s removal from the global FATF “grey list”, a credit rating upgrade by S&P, and a formal change to the inflation target, which 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.
5 important things happening in South Africa today
DStv subscribers win: MultiChoice owner Canal+ and Warner Bros. Discovery have announced that they have signed a multi-year, multi-territory agreement, saving DStv subscribers from losing major channels like Cartoon Network, CNN, Food Network, Discovery, etc. Canal+ and Warner Bros. Discovery said their new agreement marked a major milestone in the development of their collaboration on an international scale. The deal also includes the integration of HBO Max within select Canal+ group offers, with the renewal of the distribution agreement for 22 thematic channels and four free-to-air channels. [MyBroadband]
Private school warning: A proposed amendment to the Draft Taxation Laws Amendment Bill could leave South African schools facing severe cashflow strain. Many schools rely on income from taxable commercial activities. Schools that earn more than R1 million from such activities are currently required to register for VAT and may claim partial input-tax credits. However, the National Treasury now wants to remove schools from the VAT system entirely. This would force a deregistration process that could trigger a massive tax liability. The change was to come into effect from January 2026, but has been pushed back by a year. [Newsday]
Motus takes a hit: Major car dealership Motus has retrenched 86 employees, with 579 more to be affected by changes to remuneration and benefits in 2026. This comes as the group was hit by an influx of Chinese brands, which caused severe pressure and competition in the motor retail industry. Under pressure from rising living costs, Chinese brands have surged in South Africa, offering consumers a more affordable entry point to vehicles than many traditional options, including those built in South Africa itself. [Business Day]
Homeowners in trouble: Residential mortgage defaults continue to rise strongly in South Africa despite significant reductions in interest rates and inflation over the past two years. This indicates that South African households are still under immense financial strain amid a stagnant economy and elevated unemployment. The pressure South Africans are under is also reflected by the unwillingness of banks to lend to homebuyers, with mortgage growth being among the slowest of all credit extension in the country. [Daily Investor]
Another blow to US relations: The South African National Defence Force (SANDF) has confirmed that it will participate in naval exercises with other BRICS+ countries this month, including China, Russia, and Iran. Analysts have noted that the exercise is likely to draw the ire of the United States and undermine efforts to rebuild a relationship with Washington. While specific country participation has not been confirmed, the exercise is being led by China, and Iran’s fleet has reportedly already set sail. It will take place in South African waters between January 9 and 16. [Daily Maverick]
