South Africa's rand ended 2025 nearly 13% stronger against the US dollar, marking its biggest annual gain in 16 years as the greenback weakened broadly.
The risk-sensitive currency posted its first yearly rise against the dollar since 2019 and its largest increase since 2009, supported by South Africa's improved fiscal performance, success in containing inflation and a surge in precious-metal prices.
Gold and platinum, key South African exports, rallied strongly during the year.
In contrast, the US dollar slid about 9% against a basket of major currencies, heading for its worst annual performance in eight years on expectations of US Federal Reserve rate cuts, narrowing interest-rate differentials, concerns over the US fiscal deficit and political uncertainty.
Safe-haven assets
These factors fuelled demand for safe-haven assets, pushing gold past a record $4,000 an ounce level in October and putting it on track for its strongest annual gain in more than four decades.
Analysts said that while South African assets benefited, they did not fully take advantage of the commodity boom cycle.
2025 was also the first full year under South Africa's coalition government and was marked by disputes over the national budget and concerns over sweeping US tariffs imposed by President Donald Trump.
Despite the turbulence, local assets proved resilient, further boosted by the country's removal from the global financial crime watchdog's "grey list", a credit-rating upgrade by S&P, and a formal change to the inflation target that lifted investor confidence.
Rand likely to strengthen in 2026: expert
Johann Els, chief economist at PSG Financial Services, said the rand is likely to benefit in 2026 from the same factors that boosted it in 2025.
"I can see the rand continuing to strengthen in 2026, and I will not be surprised to see a 15 handle on the rand," Els said.
At 10:41 GMT, the rand traded at 16.5925 per dollar, a whisker away from Tuesday's close.
On the Johannesburg Stock Exchange, the Top-40 index was last down 0.7%, but remained near record levels for the year, largely supported by mining stocks.
South Africa's benchmark 2035 government bond strengthened, with the yield falling 2 basis points to 8.205%.
