FX.co ★ South African Rand at 2022-Highs

The South African rand appreciated to approximately 16.3 per USD, reaching levels not seen since August 2022. This rise was supported by an influx of safe-haven investments in gold and other precious metals amid global geopolitical uncertainties. Market participants also considered the implications of December's inflation figures on the central bank's imminent decisions. Annual inflation increased slightly to 3.6% from the previous 3.5%, aligning with forecasts but still remaining comfortably within the South African Reserve Bank's (SARB) tolerance of 1 percentage point around its revised 3% target. The inflation rate for 2025 averaged a 21-year low of 3.2%, falling below the central bank’s prediction of 3.3%, which has fueled speculation about a potential interest rate reduction at its policy meeting on January 29. SARB Governor Lesetja Kganyago, speaking to Bloomberg TV during the Davos summit, highlighted that inflation is expected to average about 3.5% this year and reach the 3% target by 2027, providing the central bank with the flexibility to ease monetary policy if necessary.