Africa-Press – South-Africa. The Reserve Bank’s Monetary Policy Committee (MPC) warned that a United States dollar rebound could see South Africa’s rand depreciate back to its 2023 levels against the greenback.
Reserve Bank Governor Lesetja Kganyago explained that the rand’s strength in 2025 to date has partly reflected broad dollar weakness, rather than solely rand strength.
To truly maintain a resilient stronger currency, South Africa needs faster economic growth and increased investment in the country. Until then, the rand’s movements will remain highly sensitive to global events.
For example, current interest rate movements in the United States remain a crucial factor impacting the rand’s value against the greenback.
Investec chief economist Annabel Bishop explained there is a high likelihood that the United States will continue to cut its interest rates, with the markets factoring in a 65% probability of a 25 basis point cut in the US.
“Resilient data on the US economy argues against an urgent US rate cut, but the probability is above 50% as there are still some readings showing areas of weakness, such as the Philadelphia Fed business outlook and mortgage applications,” Bishop said.
“The mixed US data has, on balance, prompted an upwards revision, to a near doubling of the market’s expectations of a US interest rate cut next month, which will support the rand, but this week’s US data publications are also key,” she said.
Interest rate cuts in the United States are generally good news for the rand, as it widens the interest rate differential between South Africa and the US.
This also comes as the rand has been on a roll in 2025, recently strengthening to its strongest level in years following Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement in mid-November.
After this statement, which showed that South Africa is on track to attain a primary budget surplus and stabilise its debt, the rand briefly dipped below R17 to the US dollar.
While it has since weakened slightly from this level, now hovering around R17.50/USD, the local currency is still far stronger than it was just two years ago.
In 2023, the rand started the year at a relatively strong level of just below R17/USD, but continued to weaken as the year progressed, reaching a peak of R19.86 against the greenback and ending the year at R18.58/USD.
Kganyago warned in his latest MPC statement that the rand could return to these levels if the US dollar rebounds.
The rand’s movements against the US dollar from 2023 to 2025 can be seen in the graph below, courtesy of the Reserve Bank.
What the rand needs
Bishop explained that the key to a stronger rand is faster economic growth, which would lead to increased investment in South Africa.
The country is on track to achieve this, with rating agency S&P Global recently upgrading South Africa’s debt rating to BB and maintaining its positive outlook.
While still in so-called ‘junk status’ territory, this is a strong sign of South Africa’s upward momentum, with the positive outlook spelling good news for future upgrades and an eventual escape from non-investment-grade status.
Bishop said the other major rating agencies, Fitch and Moody’s, are also set to potentially deliver country reviews on South Africa.
Fitch and Moody’s currently rate South Africa’s credit at BB- and BB, respectively, both with stable outlooks.
Bishop said Moody’s review of South Africa is scheduled for 5 December, while Fitch does not give a date.
In September 2025, Fitch noted that South Africa’s rating remains constrained by low real GDP growth and a high and rising government debt-to-GDP ratio.
In his MTBPS, the Finance Minister said South Africa’s GDP is projected to grow by 1.2% in 2025, and that a primary budget surplus will enable the country to stabilise its debt-to-GDP ratio.
On 14 November 2025, Moody’s noted that South Africa’s revenue gains and lower inflation target improve the country’s fiscal outlook. However, the firm warned that tough spending choices persist.
Bishop said Fitch may upgrade South Africa’s rating to align with S&P’s, but Moody’s is already at BB.
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