{"id":94449,"date":"2025-12-18T16:00:50","date_gmt":"2025-12-18T16:00:50","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand"},"modified":"2025-12-18T16:05:38","modified_gmt":"2025-12-18T16:05:38","slug":"reserve-bank-shares-good-news-about-the-south-african-rand","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand","title":{"rendered":"Reserve Bank shares good news about the South African rand"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>South Africa\u2019s new lower inflation target is giving the rand fresh momentum, with policymakers and analysts agreeing it could curb a long-term track record of weakness.<\/p>\n

Africa\u2019s largest economy last month formally adopted a 3% inflation target long championed by central bank Governor Lesetja Kganyago, aligning the goal more closely with trading partners.<\/p>\n

The shift \u2014 replacing the 3% to 6% target band in place since the turn of the century \u2014 has helped pull 10-year bond yields to 2017 lows and put the rand on track for its strongest year against the dollar since 2009.<\/p>\n

\u201cInflation differentials are very important for long-run exchange rates,\u201d David Fowkes, a member of the central bank\u2019s monetary policy committee, said at a media lunch last month. \u201cThis idea that the rand is always weak is basically a policy decision that we made to have a high inflation target.\u201d<\/p>\n

Now that it\u2019s been lowered, \u201cI\u2019m sure we\u2019ll get some volatility, I\u2019m sure there\u2019s still going to be shocks, but you just shouldn\u2019t have the same kind of trend depreciation over long periods of time,\u201d Fowkes said.<\/p>\n

The new goal is likely to curtail long-term rand depreciation by keeping South Africa\u2019s inflation closer to that of other nations, reducing the need for the currency to weaken to maintain purchasing power parity, according to research by RMB Morgan Stanley analysts, including Arnav Gupta and David Cueva.<\/p>\n

The new goal may also help reduce the real effective exchange rate \u2014 the currency\u2019s price-adjusted value \u2014 which would benefit the economy, they said.<\/p>\n

Over the past 20 years, the rand has weakened about 7% a year against the dollar, with an estimated 12 basis points of pass-through for every 1% move.<\/p>\n

That slide may have added about 80 basis points to headline inflation, the analysts said.<\/p>\n

\u201cGiven the currency\u2019s volatility, this further increases the risk premium embedded in rates, pushing markets to price higher front-end yields,\u201d they wrote.<\/p>\n

\u201cA slower pace of depreciation would help to reduce this risk premium and support lower real rates.\u201d<\/p>\n

For More News And Analysis About South-Africa<\/span> Follow Africa-Press<\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. South Africa\u2019s new lower inflation target is giving the rand fresh momentum, with policymakers and analysts agreeing it could curb a long-term track record of weakness. Africa\u2019s largest economy last month formally adopted a 3% inflation target long championed by central bank Governor Lesetja Kganyago, aligning the goal more closely with trading […]<\/p>\n","protected":false},"author":84,"featured_media":94447,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[275],"class_list":["post-94449","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-south-africa-2"],"yoast_head":"\nReserve Bank shares good news about the South African rand - South Africa<\/title>\n<meta name=\"description\" content=\"South Africa\u2019s new lower inflation target is giving the rand fresh momentum, with policymakers and analysts agreeing it ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Reserve Bank shares good news about the South African rand\" \/>\n<meta property=\"og:description\" content=\"South Africa\u2019s new lower inflation target is giving the rand fresh momentum, with policymakers and analysts agreeing it ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2025-12-18T16:00:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-12-18T16:05:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2025\/12\/sm_1766061287.270803.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"576\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Reserve Bank shares good news about the South African rand\",\"datePublished\":\"2025-12-18T16:00:50+00:00\",\"dateModified\":\"2025-12-18T16:05:38+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand\"},\"wordCount\":357,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2025\/12\/sm_1766061287.270803.jpg\",\"keywords\":[\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/reserve-bank-shares-good-news-about-the-south-african-rand\",\"name\":\"Reserve Bank shares good news about the South African rand - 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