When Lesetja Kganyago, Governor of South African Reserve Bank, addressed a forum in Johannesburg on October 10, 2025, he insisted the rand was no longer “weak and volatile” as it lingered around R18.23 per US dollar. The comment came just weeks after the currency flirted with a 10‑month high of roughly 17.3 rand per dollar in mid‑September, buoyed by soaring gold prices and a softening US dollar.
Why the Rand Was Riding High in September
On September 15, 2025, Trading Economics reported that the rand firmed to about 17.3/$, its strongest level since November 2024. Two forces were at play. First, global precious‑metal prices surged—gold hit US$2,170 per ounce, a level that typically lifts the rand because South Africa is a major exporter. Second, the US dollar slipped after the Federal Reserve signalled a possible pause in rate hikes, leaving the rand comparatively attractive.
Investors were also eyeing two critical data releases: South Africa’s own inflation numbers due later in September and the US Federal Reserve’s policy decision slated for the same week. The anticipation created a narrow trading range, with the rand hovering between 17.2 and 17.4 per dollar.
Inflation, Policy Targets, and the September 18 Rate Decision
The domestic backdrop was just as tense. July’s consumer‑price index rose to 3.5 % year‑on‑year, up from 2.7 % in March, nudging the annual inflation forecast toward the 4 % mark for year‑end. The National Treasury and the SARB were in ongoing talks about lowering the official inflation target from the current 4.5 % band to a tighter 3 % range.
All eyes turned to the SARB Monetary Policy Decision 2025Johannesburg. Market consensus expected the central bank to leave its repo rate unchanged at 7 %, a stance meant to anchor inflation expectations while allowing the economy to digest earlier rate cuts in May and July.
"We are watching the inflation trajectory closely," said Thabo Mokoena, chief economist at Investec. "If the data keep pointing upward, the SARB could consider a modest hike, but the current balance of risks still favours a hold."
October’s Sharp Decline: What Triggered the R18.23 Level?
By early October, the rand had slipped dramatically, touching R18.23/$, according to local outlet tashs.co.za. The drop was not a single‑day event; it unfolded as a confluence of external and internal shocks:
- Global market volatility surged after European central banks hinted at tighter policy, pulling capital away from emerging‑market currencies.
- South Africa’s export earnings lagged, particularly in the mining sector, which faced lower commodity prices for platinum and manganese.
- Domestic political uncertainty surrounding budget allocations added a speculative premium on the rand.
The immediate impact was felt at the household level. Imported goods—from smartphones to gasoline—became noticeably pricier, squeezing middle‑class salaries. A survey by the South African Institute of Race Relations found that 42 % of respondents expected a rise in living costs within the next month.
Responses from Key Players
In the wake of the slump, Governor Kganyago reiterated his confidence in the currency’s resilience. Speaking at a Kgalema Motlanthe Foundation forum, he noted that the central bank’s foreign‑exchange reserves had crossed the US$70 billion threshold, providing a substantial buffer.
"When people tell you the rand is a weak and volatile currency, encourage them to think again," Kganyago said. "If the rand gets uncomfortably strong, we would be happy to accumulate more reserves."
The US Federal Reserve opted to hold its benchmark rate steady at 5.25 % on September 18, a decision that briefly steadied the greenback but did little to reverse the rand’s slide. Analysts at Standard Bank warned that any further weakening could trigger a feedback loop of higher import‑price inflation, prompting the SARB to reassess its “hold” stance.
Broader Economic Implications
Beyond immediate price pressures, the rand’s volatility threatens South Africa’s debt‑service capabilities. Government bonds, already trading at a premium, could see yields rise if the currency weakens further, raising borrowing costs for both the state and corporates with dollar‑denominated obligations.
On the flip side, a softer rand can make South African exports more competitive, potentially boosting sectors like agriculture and tourism. Yet the net effect depends on whether the price advantage outweighs higher input costs for exporters that rely on imported machinery.
What Comes Next? Outlook for Late 2025
Looking ahead, the SARB’s next policy meeting is slated for November 20, 2025. Market participants expect the board to weigh the trade‑off between inflation containment and growth support. If July’s inflation data hold steady at 3.5 % and the rand continues its downward drift, a modest 25‑basis‑point hike could become a plausible scenario.
Meanwhile, the government is poised to release its 2025/26 national budget on November 23. Fiscal discipline—particularly in reducing the primary deficit—will be crucial for maintaining investor confidence and preventing further currency stress.
Key Takeaways
- The rand flirted with a 10‑month high of ~17.3/$ in September, driven by gold prices and a soft US dollar. \n
- July inflation rose to 3.5 %, prompting expectations of a steady 7 % repo rate on September 18.
- By early October, the rand plunged to R18.23/$, reflecting global volatility, weaker exports, and local political uncertainty.
- Governor Kganyago emphasized that the rand is no longer “weak and volatile,” citing reserves above US$70 billion.
- Future SARB decisions will hinge on inflation trends, reserve levels, and the upcoming fiscal budget.
Frequently Asked Questions
How will the rand’s weakness affect everyday South Africans?
A weaker rand makes imported goods—fuel, electronics, food items—more expensive. Households will see higher grocery bills and transport costs, squeezing disposable income, especially for middle‑class earners and public‑sector employees.
What is the likelihood of the SARB raising interest rates in November?
If inflation stays above the SARB’s 3 % target and the rand continues to slide, many analysts forecast a 25‑basis‑point hike. However, the board may also opt to hold rates steady to protect growth, especially if reserve buffers remain strong.
Why did gold prices boost the rand in September?
South Africa is the world’s second‑largest gold producer. Higher gold prices increase export revenues, which improves the trade balance and supports the local currency, pushing the rand toward stronger levels.
What role do foreign‑exchange reserves play in stabilising the rand?
Reserves give the SARB firepower to intervene in the forex market, buying rand when it falls too sharply. With reserves now above US$70 billion, the central bank has a sizable cushion to smooth out excessive volatility.
How might the upcoming national budget influence the rand?
A fiscally disciplined budget—lowering the primary deficit and avoiding new debt—can boost investor confidence, helping to stabilise the rand. Conversely, expansive spending without clear financing could add pressure on the currency.
One You tea
October 12, 2025 AT 23:25Yo, the rand's noseddiving like a broken kite and nobody's calling it out enough. If we keep letting foreign investors dictate our fate, our pockets will stay empty. This whole “weak and volatile” narrative is just a smokescreen for bad governance. Wake up!