The South African rand was largely unchanged in thin year-end trading on Tuesday, holding on to its strong gains against a weaker US dollar.
By 07:47 GMT, the rand was trading at 16.6650 to the dollar, little changed from Monday’s close. The US currency remained near its lowest level in three months, offering support to emerging market currencies, including the rand.
South Africa’s currency is on track to record gains of about 12% against the dollar this year, its strongest annual performance since 2009. The rally has been underpinned by improved public finances, better control of inflation and a surge in prices of precious metals such as gold and platinum, which are among the country’s key exports.
Analysts say higher commodity prices have helped strengthen South Africa’s trade position, while tighter fiscal discipline has improved investor confidence in the economy.
The US dollar, meanwhile, has fallen around 9% this year against a basket of major currencies. That puts it on course for its worst annual performance in eight years.
The dollar’s weakness has been driven by expectations that the Federal Reserve will begin cutting interest rates in 2026, narrowing the gap between US borrowing costs and those in other major economies. Concerns over the US fiscal deficit and political uncertainty have also weighed on the currency.
With markets quiet as the year draws to a close, traders are closely watching how global interest-rate expectations and commodity prices will shape currency movements in the months ahead.
The rand’s strong performance this year has made it one of the standout emerging market currencies, though analysts caution that global volatility could still test its resilience in 2026.
