Goldman Sachs’ latest Global FX Forecasts predict that the rand will strengthen to R14 to the US dollar by 2026.
The Global FX Forecasts provide an overview of where Goldman Sachs sees currencies trade over the next three years.
The global investment bank forecasts that the rand will trade at R18.25/USD within the next three months.
It will then strengthen to R17.75 to the greenback in six months and to R17.50 within the next twelve months.
Goldman Sachs expects this trend to continue, strengthening to R16.00/USD in 2024, R15.00/USD in 2025, and R14.00/USD in 2026.
This forecast aligns with many other banks and economists who said the rand is oversold and will strengthen in future.
Efficient Group director and chief economist Dawie Roodt said the rand should be trading at R15 to R16 to the US dollar.
However, numerous own goals, including South Africa’s close ties with Russia, saw the rand slump to R19.87/USD earlier this year.
Amidst the turmoil, the South African Reserve Bank (SARB) warned about sanctions by the United States as a new risk in its new Financial Stability Review (FSR).
The SARB said South Africa’s desire to remain politically neutral might not be perceived as such, potentially resulting in secondary sanctions imposed by the US.
The South African financial system will not function if it cannot make international payments in US dollars.
After getting close to R20/USD, the rand strengthened to close to R18/USD after tensions with the United States started to ease.
Roodt said the rand could easily strengthen to below R17/USD should there be good news and stability in South Africa.
He has previously calculated the fair value of the rand to be around R16.50 to the US dollar using Purchasing Power Parity (PPP) and the currency’s historical undervaluation.