As of the market opening on September 25, 2024, the South African Rand has risen by 11% against the US dollar since its low in February, reflecting gains in key economic sectors from the second through the third quarter of 2024.
On September 3, 2024, Statistics South Africa (Stats SA) reported a 0.4% quarter-on-quarter GDP growth for the April to June period, supported by notable improvements across key sectors.
In the second quarter of 2024, improvements in the electricity and transport sectors, combined with a surge in gold prices by 28% year-to-date, fueled GDP growth, as the rand increased in value.
The Rand’s appreciation has been supported by an improving GDP, bolstered by a more stable electricity supply, transportation infrastructure, and a rise in gold prices by 28% year-to-date.
Following a recent rate cut by the US Federal Reserve on September 18, 2024, which weakened the dollar, the Rand has strengthened to 17.25 ZAR as of September 25, 2024, marking a recovery from 19.20 ZAR in February 2024.
Historically, the Rand was relatively stable at 13 ZAR to the dollar in May 2021, as the economy enjoyed favorable conditions.
However, as GDP growth slowed, especially between 2022 and 2023 due to ongoing power shortages and declining prices for key commodities like gold and platinum, the rand concurrently weakened.
By May 2023, the Rand had depreciated by 30%, reaching 15 ZAR to the dollar.
Since early 2024, the Rand has reversed some of its earlier losses, appreciating by 10% as of September 25, recovering to 17.25 ZAR against the dollar.
In a recent statement, President Cyril Ramaphosa outlined plans for continued infrastructure development:
“We have a clear intention to turn our country into a construction site, with roads, bridges, houses, schools, hospitals, and clinics being built… and new power lines installed.”
He also emphasized the country’s commitment to renewable energy, noting, “We have a huge pipeline of renewable energy projects representing over 22,500 megawatts.”