Africa’s Richest Economy’s Currency Hits Nine-Month High as Fed’s Dovish Signal Weakens Dollar

The South African rand strengthened on Friday, lifted by a weaker U.S. dollar and a rebound in gold prices, after Federal Reserve Chair Jerome Powell signalled the possibility of a rate cut at the central bank’s September meeting.

The rand had traded sideways for most of the week, even as South Africa reported its highest consumer inflation in 10 months on Wednesday, according to Reuters.

By 15:56 GMT, the rand was trading at 17.4525 to the dollar, about 1.5% stronger than Thursday’s close and its firmest level since early November 2024.

The dollar index slipped 0.8%, while gold prices climbed, further boosting demand for South Africa’s currency, given its status as a major gold producer. Like other risk-sensitive assets, the rand often tracks global policy signals and economic data.

Next week, investors will focus on South Africa’s business cycle leading indicator, producer inflation, money supply, private sector credit, trade balance, and budget balance data.

The Johannesburg Stock Exchange’s Top-40 index closed about 1% higher, while the yield on South Africa’s benchmark 2035 government bond fell 7 basis points to 9.57%.

The Johannesburg Stock Exchange’s Top-40 index closed about 1% higher, while the yield on South Africa’s benchmark 2035 government bond fell 7 basis points to 9.57%.

Meanwhile, South Africa’s economy likely grew for a third straight quarter, supported by rebounds in manufacturing and mining, though fresh U.S. tariffs threaten to undercut momentum.

Economists surveyed by Bloomberg between Aug. 8 and 13 forecast a 0.4% expansion in the second quarter, up from 0.1% in the previous three months.

The outlook dimmed on Aug. 7 when U.S. President Donald Trump imposed new tariffs on several trading partners, including a steep 30% levy on South African exports, one of the highest globally.

In response, South Africa is seeking to cushion the blow by strengthening trade with China. Under a new deal, Beijing will begin importing five varieties of South African stone fruit, opening a valuable gateway into one of the world’s fastest-growing consumer markets.