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Corporate and Investment Bank
Standard Bank Group
South Africa FX 02 September 2026

FX Monthly Chart Book

Shireen Darmalingam

  • The rand delivered a strong performance in August 2026, appreciating from around R16.40/$ at the beginning of the month to below the psychologically important R16.00/$ level by month-end. It reached its strongest level since the outbreak of the Iran conflict in February, supported by a combination of favourable global and domestic factors, including a weaker US dollar, improving global risk appetite, rising gold and platinum prices, and stronger foreign demand for South African bonds and other emerging-market assets. The currency strengthened further to around R15.92/$ during the final week of August, buoyed by higher gold prices and broad-based dollar weakness. Among emerging market currencies, the KRW, ZAR, MXN, TWD and IDR were among the best performers, while the RUB, BRL, COP, PHP and TRY lagged.
  • A key driver of the rand's strength was the easing of concerns over a broader escalation of the Iran war. As fears of disruptions to global oil supplies moderated and oil prices retreated from earlier highs, investor sentiment towards emerging markets improved. South Africa also continued to benefit from favourable terms of trade, supported by elevated precious metals prices that boosted exports earnings. Domestically, confidence was reinforced by ongoing fiscal consolidation efforts and continued progress with structural reforms under Operation Vulindlela, helping to sustain foreign investor appetite for local assets.
  • The recent improvement in SA's terms of trade, which increased by almost 3% in August, provided further support for the currency. The rand gained 2.9% against the US dollar and 2.4% on a trade-weighted basis during August, outperforming many of its emerging market peers. On a real trade-weighted basis, the currency is now almost one standard deviation stronger than its long-term average. The improvement in the terms of trade is a key input into our fair-value model, which indicates that the rand remains broadly aligned with underlying economic fundamentals.
  • The rand's appreciation continues to provide a meaningful disinflationary impulse. The currency is around 9% stronger against both the US dollar and on a trade-weighted basket than a year ago, helping to offset the inflationary impact of higher fuel prices. Petrol prices are already more than 18% higher than a year earlier. Against this backdrop, financial markets are pricing in a near-even probability of a further SARB rate hike at the September MPC meeting, reflecting the difficult trade-off facing policymakers. While the SARB remains mindful of the inflationary risks posed by elevated fuel prices, it has already tightened policy more aggressively than many central banks since the start of the Iran conflict, and real interest rates remain relatively high. As such, the September meeting remains a close call, although the balance of risks appears slightly tilted towards a pause rather than further tightening.
  • Despite its strong performance, the rand experienced bouts of volatility during the month. Investor sentiment was periodically unsettled by uncertainty surrounding the Iran conflict, the risk of renewed disruptions to shipping through the Strait of Hormuz, and concerns that higher energy prices could prove detrimental to South Africa's trade balance and inflation outlook. Markets also remained sensitive to developments in US trade policy and tariffs, as well as changing expectations for US interest rates.
  • Looking ahead, the rand is likely to remain highly sensitive to developments in the Middle East, oil price movements, and shifts in global risk sentiment. The principal downside risk remains a renewed escalation of the Iran conflict, which could strengthen the US dollar, push energy prices higher, and trigger renewed capital outflows from emerging markets. Nevertheless, our baseline view is that the rand will remain broadly supported by favourable terms of trade, precious metals prices, and domestic reform momentum. We expect the currency to end 2026 at R16.20/$ and 2027 at R16.40/$.
 

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