Rand dips below R17/USD for the first time in two years

On Thursday morning, the rand briefly dipped below R17 to the United States, marking the local currency’s strongest level since February 2023.

This comes after Finance Minister Enoch Godongwana presented South Africa’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday, 12 October.

In his statement, the minister announced that South Africa is on a strong fiscal path, with the state set to report a larger-than-expected primary budget surplus.

In addition, Godongwana announced that the Reserve Bank’s inflation target would be lowered and narrowed to 3%, which is expected to hold immense benefits for the country’s economy over the next few years.

These announcements and the government’s improving fiscal health strengthened the rand on Wednesday, where it hovered just above the R17/USD mark, dipping as low as R17.04/USD.

Citadel Global director Bianca Botes said the rand firmed around 0.5% during Godongwana’s address and opened Thursday, 13 October, stronger at R17.08/USD.

Ashburton Investments’ head of fixed income, Albert Botha, explained that a lower inflation target today raises the probability of lower policy rates tomorrow. 

In addition, on the currency front, a credible disinflation path narrows the inflation differential between South Africa and its primary trading partners, while also cushioning the rand against global dollar swings. 

“Yet in a world where US interest rates drift down only gradually and trade frictions persist, rand strength should be seen as cyclical relief than a long-term structural shift,” he cautioned.

This comes after a strong month for the rand, which also strengthened significantly when it was announced that South Africa had been removed from the Financial Action Task Force’s “greylist”.

All of this positive momentum behind South Africa has strengthened the rand, aided by speculation that the country could see a credit rating upgrade from S&P Global on Friday, 14 November.

The graph below shows the year-to-date performance of South Africa’s rand against the United States dollar in 2025.