How High Is the Potential for the South African Currency to Strengthen in the Coming Period?

South African Rand is currently the focus of market discussions due to being considered undervalued relative to its true worth. According to a survey involving investors and economists, this African currency has significant room to strengthen as the government’s targeted economic policy changes aim to boost growth. However, market opinions on the future of the Rand are quite diverse, creating an interesting disagreement to watch.

Survey Data Shows Potential for Currency Appreciation

The latest survey cited by Jin10 involved 14 respondents and produced an average fair value estimate of the Rand against the US dollar at 15.64. Interestingly, market perceptions are not uniform: half of the respondents believe the Rand is currently undervalued, three see it near its fair value, while four others consider it already overvalued. The estimated fair value range reported spans from 12.23 to 18, reflecting high disparity in opinions about this African currency’s position in the international market.

Divergent Predictions from Major Institutions

South Africa’s Central Bank adopts a more conservative stance in its projections. They estimate the Rand will weaken to 16.73 by the second quarter of 2026, with a projection range between 16.54 and 17.10 by the end of 2028. These projections contrast with the optimistic views of several market analysts.

Frank Blackmore, an economist at KPMG Johannesburg, instead predicts the Rand will strengthen to 15.50 by the end of 2026. He believes fiscal policy will be the main driver of South Africa’s currency movements this year. The national budget announcement scheduled for February 25 will be a critical moment to test the government’s commitment to its economic reform agenda and is significant for understanding the future trajectory of the African currency.