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Standard Bank Group
South Africa FX 10 February 2026

FX Monthly Chart Book

Shireen Darmalingam

  • The rand was significantly stronger in January, supported by a combination of improving domestic fundamentals and favourable global market conditions. It appreciated by 2.6% over the month against the dollar, strengthening to around R15.64/$ at its strongest level, and ending January at R16.14/$. Its strength was driven by broad?based dollar weakness, gains in precious metal prices, and renewed investor appetite for emerging?market assets. The rand also gained against major crosses, rising 1.6% against the euro and 0.9% against the pound. Performance across emerging-market currencies was mixed: the RUB, BRL, MXN, CLP and MYR ranked among the strongest performers against the dollar, with the INR, TRY, IDR, HKD and PEN amongst the weakest performers.
  • The performance of the rand was influenced by both global and domestic factors in January. The global environment remained broadly risk?on, with rising demand for commodities, particularly gold and silver, providing support for commodity currencies such as the rand. Soaring precious metal prices helped to reinforce the currency's resilience. The rand's strength also emanated from a steady domestic monetary policy backdrop, with the SARB keeping interest rates unchanged at 6.75% in January. This decision, supported by contained inflation and the adoption of the 3% inflation target, and an improving macroeconomic outlook, further bolstered investor confidence in the currency. SA's removal from the FATF grey list, and the sovereign credit rating upgrade in late 2025, further aided the boost to confidence.
  • The rand's recent gains are largely underpinned by the estimated 14% spike in SA's terms of trade (export prices relative to import prices) over the past year. Our econometric model implies that, under prevailing fundamentals, the fair value estimate for the rand sits at R16.20/$, assuming spot terms of trade, and base-case forecasts for inflation, growth and interest rates. In a scenario of stronger terms of trade, where the terms of trade are 5% higher, and macroeconomic variables follow the same base case forecasts, the fair value estimate strengthens to R15.40/$. By contrast, a terms?of?trade relapse, the terms of trade 10% lower results in a weaker fair value estimate of R17.80/$, again under base-case macro assumptions. A scenario of better domestic fundamentals, with spot terms of trade, growth 0.5 percentage points higher, inflation 0.5 percentage points lower, and a fiscal deficit 0.5% of GDP smaller, yields an improved fair value estimate of R15.70/$ (see Rand and bonds on top of their basics, by Elna Moolman).
  • Over the medium term, we anticipate the rand to trend sideways in real trade-weighted terms. We see the rand averaging R16.38/$, R19.53/€ and R22.30/£ in 2026. The rand is expected to end this year at R16.60/$, and R16.85/$ in 2027.
 

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