Lesetja Kganyago, the governor of the South African Reserve Bank, stated that the rand could strengthen further if the government in Pretoria continues to implement reforms and uphold responsible economic policies. The currency has appreciated approximately 2.5% against the U.S. dollar since the beginning of the year, distinguishing itself as one of the top performers among emerging market currencies while many of its peers have faced declines.
Kganyago emphasized that the positive momentum for the rand will not solely rely on market dynamics; it depends heavily on the government’s commitment to maintaining prudent policies and advancing structural reforms. This momentum could also bolster the performance of South Africa’s bonds and stocks.
This summer, South Africa’s National Treasury announced a series of reforms targeting the energy, freight, water, and telecommunications sectors. The government has pledged to reduce public spending, increase revenue, and take further steps to lower borrowing in the medium term.
The rand has experienced significant gains since the African National Congress was compelled to collaborate with other political parties after failing to secure a parliamentary majority in the May elections—its first defeat since the end of apartheid in 1994. Kganyago remarked that restoring confidence among investors and consumers could serve as a substantial economic boost.
On the issue of inflation, Kganyago discussed ongoing efforts between the National Treasury and the central bank to lower the current inflation target from the existing 3% to 6% range. He expressed optimism that a resolution would be reached by next year, confirming that while there is consensus on the need for a lower target, discussions continue regarding the extent of that reduction, as the current target may hinder the country’s competitiveness.