Johannesburg at the Crossroads: The Outlook for the South African Rand Amid Financial Reforms

The South African rand is in the spotlight among investors and analysts due to its potential for revaluation amid extensive economic reforms. The market is actively discussing opportunities for currency strengthening as the government implements ambitious plans to stimulate economic growth. The situation in Johannesburg, the country’s financial hub, is becoming a barometer of these changes.

Investors see potential for rand appreciation

According to Jin10 data, half of the surveyed investors and economists (14 participants) consider the rand undervalued at current levels. The estimated fair value of the currency against the US dollar averages 15.64. However, opinions among experts vary: three see the rand close to its fair value, while four believe it is overvalued. The range of fair value estimates extends from 12.23 to 18, reflecting significant diversity in forecasts within the financial community.

Diverging forecasts: market outlook vs. central bank

The official stance of the South African Reserve Bank appears more conservative. The central bank expects the rand to weaken to 16.73 by the second quarter of 2026. By 2028, the exchange rate is projected to fluctuate between 16.54 and 17.10. These forecasts contrast with the market’s optimism, though they remain more realistic than the most optimistic investor expectations.

Frank Blackmore, an economist at the international consulting firm KPMG based in Johannesburg, takes a more confident position. His calculations indicate the possibility of the rand strengthening to 15.50 by the end of 2026. The expert believes that the key factor influencing currency dynamics this year will be the direction of fiscal policy.

Testing ambitions: the role of fiscal policy in Johannesburg

The announcement of the national budget on February 25 will be a critical point for assessing the government’s reform intentions. This moment is seen as a kind of test to determine how serious Johannesburg (as a political influence center through the financial system) is about structural reforms. The quality of proposed measures and the persuasiveness of the development strategy will directly impact investor confidence in the rand. If the government demonstrates a firm commitment to fiscal reforms, it could serve as a catalyst for currency appreciation and attract foreign capital to South Africa’s markets.