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The rand’s relative resilience has been aided by rising investment levels, lower inflation, and structural reforms, with a cautious central bank maintaining its favorable interest-rate premium over the greenback.
South Africa’s rand finds itself among the five best-performing emerging-market currencies of the year, according to analysts at Credit Agricole SA and Ashmore Group Plc. This is happening for the first time since 2016.
That places it fifth after the Malaysian ringgit, Hong Kong dollar, Thai baht, and Peruvian sol among 24 major developing-nation currencies tracked by Bloomberg. Developing-nation currencies have struggled in 2024 as robust US economic growth bolstered the dollar.
The rand’s relative resilience has been aided by rising investment levels, lower inflation, and structural reforms, with a cautious central bank maintaining its favorable interest-rate premium over the greenback.
The value of fixed-investment projects in South Africa rose to R794 billion rand in 2024, up from R193 billion in 2023, according to Credit Agricole.
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The increase comes amid progress on infrastructure and energy reforms, including public-private partnerships at the country’s biggest port. Electricity provider Eskom Holdings SOC Ltd. reduced disruptions, further supporting economic activity.
Annual inflation, which accelerated marginally in November to 2.9%, still remains around the lowest level in more than a decade and well within the central bank’s 3% to 6% target range. Inflation expectations for the next year have dropped to 4.6%, according to the Bureau for Economic Research, providing the South African Reserve Bank (Sarb) with room to cut interest rates.
