The rand is “treading water” around R16 to the dollar at the moment, as global uncertainty has markets in a ‘wait-and-see’ mode, and tensions in the Middle East push traders into gold.
According to Investec Chief Economist Annabel Bishop, the rand strengthened in early trade on Monday, but this was mostly due to the dollar’s weakness.
Markets were unsettled—but largely unmoved—by weekend announcements from US President Donald Trump that he would hike global tariffs to 15% after the US Supreme Court struck down his “reciprocal” tariff regime.
Despite the muted market reaction, uncertainty is very high, Bishop said, noting that the World Uncertainty Index (WUI) is near its peak on global events.
The WUI peaked last year at the end of September, driven by concerns about the United States, she said, with global markets and growth firmly tied to US fundamentals.
The US average effective tariff breached 10% in the period, and data published in September saw US growth moderating in the first half of the year.
August 2025 saw unilateral tariffs imposed after several delays under the International Emergency Economic Powers Act (IEEPA), which heightened uncertainty and negatively affected financial market sentiment on global growth.
Among these was a 30% tariff on South African goods.
Last week Friday (20 February), the US Supreme Court invalidated the use of the IEEPA for tariffs—but Trump immediately announced section 122 tariffs instead, resulting in a new global tariff of 10% rising to 15%, while individual product tariffs remained.
Notably, the US dollar dropped only modestly following the announcement, and the US effective tariff has been lowered somewhat.
South Africa, in particular, stands to be a potential winner from the change, with its effective tariff dropping from 40% (10% global tariff + 30% reciprocal tariff) to 15%.
Wait-and-see
However, a significant degree of uncertainty still prevails on the outlook, Bishop said.
“The uncertainty around the impact of the new tariffs in the US is high, but for South Africa, it will still have little impact on GDP—even if the US maintains its 30% tariff on national security and other SA-specific grounds, and also with a fall away in AGOA benefits.”
The rand has also seen some mild gains as the gold price has lifted amid escalating geopolitical risks and US policy uncertainty.
This is mostly tied to the ongoing tensions in the Middle East, with the US gathering forces close to Iran. The US still seeks to curtail Iran’s nuclear capability.
“With the US dollar and gold price tending to have an inverse relationship, this has added to the rand’s gains against the US dollar, and the rand strengthened overall from R16.22/USD on Thursday to R15.97/USD on Monday,” Bishop said.
Markets expect a deal between the US and Iran on Iran’s nuclear capability, with negotiations between the countries to continue this week, adding to uncertainty, while the Russian/Ukraine conflict is seen to have escalated as well.
Bishop warned that the tensions are feeding into oil prices, with global oil moving above $70 a barrel, which will bleed into fuel price recoveries.
Echoing analysis of the latest recovery data from the Central Energy Fund, South Africa is already building for a fuel price hike in March 2026, she noted.
The latest data from the CEF shows that petrol prices could be hiked by around 9 cents per litre in March under current conditions, while diesel prices are faring worse, with a 52-cent-per-litre hike on the way.
