The rand may clock another year of gains supported by easing interest rates, with firmer public finances also boosting South Africa’s domestic economy, Goldman Sachs said in a research note.
The currency ended 2025 nearly 13% stronger against the US dollar, marking its biggest annual gain in 16 years as the greenback weakened broadly.
Strength this year could come from a scenario of steady global growth and gradual US interest rate cuts.
The bank said South Africa’s risk-sensitive currency also stands to benefit from its exposure to precious metal prices and comparatively lower near-term political risk than peers facing elections in 2026.
Investors are increasingly rotating towards emerging markets, where domestic demand is recovering and monetary policy is becoming less restrictive, the note said.
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South Africa is grouped alongside India and Brazil as markets where easing inflation and lower borrowing costs could bolster interest-rate-sensitive assets.
In equities, Goldman expects the country’s banks and retailers to benefit from lower interest rates and an improvement in credit conditions while mining stocks take advantage of firmer gold prices.
On the Johannesburg Stock Exchange, the Top-40 index last traded down 0.8%, with the nation’s benchmark 2035 government bond weakening by 8 basis points to 8.37% on Thursday.
The rand traded around 16.50 against the dollar, on the backfoot for much of the day as domestic investors assessed dour manufacturing sector releases.
A survey showed that South Africa’s manufacturing sentiment fell in December to its lowest level for 2025.
A statistics agency report published two hours later, pointed to a contraction of 1.0% in manufacturing output for November, defying analysts’ expectations of a 0.2% increase.