Resilience, softer dollar sees rand end year on a high as investors weigh risk

Domestic currency ending the year on a high note, supported by higher metals prices

- SIPHELELE DLUDLA

THE rand has emerged as one of the more resilient emerging-market currencies in a year marked by global volatility, benefiting not only from improving domestic fundamentals but also from sustained weakness in the US dollar.

This comes as the domestic currency is ending the year on a high note as it surged to its highest in three years this week, strengthening to R16.71 against the US dollar, the highest since mid-August 2022, supported by higher prices of precious metals, particularly gold.

The rand was also strengthened by consumer inflation softening to 3.5% in November from 3.6% in October, moving closer to the SA Reserve Bank's (Sarb) new 3% target and strengthening the case for a rate cut next month.

The rand has gained over 10% against the dollar so far this year, amid improving fiscal and monetary policy credibility and a lower inflation target, which is expected to bolster economic growth.

Increased investment in critical infrastructure and political stability are also supporting the positive outlook.