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

FX Monthly Chart Book

Shireen Darmalingam

  • The rand experienced a volatile September, ending the month below its mid-year highs as escalating geopolitical tensions in the Middle East fuelled a sharp rise in global oil prices and increased risk aversion towards emerging market assets. The currency weakened from around R16.05/$ at the beginning of the month to R16.42/$ by month-end, ending September 1.9% weaker against the US dollar, while gaining 0.5% against the euro and 0.2% against the pound. The rand initially found support from SA's relatively high real interest rates, favourable terms of trade and periods of broad US dollar weakness. However, these supportive factors were increasingly offset by concerns over the economic impact of higher energy prices, rising global inflation risks and a firmer dollar as investors reassessed the likelihood of further tightening by major central banks. Among emerging market currencies, the COP, KRW, BRL, CZK and RON were among the strongest performers during the month, while the TRY, HUF, TWD, RUB and CLP lagged.
  • During much of September, rising oil prices coincided with rand weakness as investors focused on the adverse impact of higher energy costs on South Africa's inflation outlook, growth prospects and import bill. However, towards month-end, oil prices eased on signs of progress in Iran-related negotiations, while the rand recovered some ground amid improved global risk sentiment and support from SA's favourable yield differential.
  • The outlook for the rand remains dependent on global developments at the moment. The most important external factor will be developments in the Middle East and their implications for energy markets. A sustained decline in oil prices, driven by easing geopolitical tensions or increased global supply, would support the rand by improving SA's inflation outlook, reducing pressure on the trade balance and affording the SARB greater flexibility to lower interest rates. Conversely, a renewed escalation in the conflict that keeps oil prices elevated could weigh on the currency as investors factor in weaker growth prospects and higher inflation.
  • The trajectory of the US dollar and Fed policy will also remain critical. Evidence of a gradual cooling in the US economy and labour market could limit further dollar strength and support capital flows into higher-yielding emerging markets, including South Africa. However, if inflation remains persistent and major central banks maintain restrictive policy settings for longer, emerging market currencies are likely to face renewed headwinds.
  • Overall, while the rand came under pressure during September from higher oil prices and heightened geopolitical uncertainty, its losses were partly mitigated by South Africa's favourable interest rate differential, disciplined monetary policy framework and a resilient external position. The currency's performance during Q4:26 will depend largely on whether global energy and geopolitical risks begin to recede or continue to dominate investor sentiment.
  • Key supporting factors are the 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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