Rand Sees Biggest August Gain in 20 Years as Equities Rally

AFRICAN STOCKS AND FINANCESeptember 2, 2025 at 12:17 PM UTC

TLDR

South Africa’s rand was its strongest August in two decades, supported by a weaker dollar, firmer commodity prices, and renewed investor demand
The currency gained over 3% against the US dollar last month, its best August since 2005
The FTSE/JSE Africa All Share Index rose over 3.4%, the strongest monthly advance for August since 2006

South Africa’s rand was its strongest August in two decades, supported by a weaker dollar, firmer commodity prices, and renewed investor demand for high-yielding assets.

The currency gained over 3% against the US dollar last month, its best August since 2005. The FTSE/JSE Africa All Share Index rose over 3.4%, the strongest monthly advance for August since 2006.

The rally came as the coalition government pushes economic reforms and works to improve the fiscal outlook. The South African Reserve Bank has kept inflation contained, while elevated prices for gold, platinum, and other key exports have boosted terms of trade.

Rand Merchant Bank strategists said fundamentals remain strong, while carry-trade inflows have added to support. The rand delivered investors 3.2% in carry returns in August, ranking among the top performers in emerging markets. Government bonds also drew robust demand at the latest auction, the highest in seven weeks.

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Key Takeaways

The rand’s outperformance is notable because August is historically a weak month for South African assets, with the currency averaging a 2.4% decline over the past two decades and equities typically lagging. This year’s rally highlights how global macro shifts and domestic policy improvements are reshaping investor sentiment. Dollar weakness has revived appetite for high-yield currencies, and South Africa’s strong terms of trade have positioned the rand as a beneficiary. Confidence in fiscal reform and credible monetary policy have also improved flows into both bonds and equities. With commodity markets expected to remain supportive and carry returns attractive, portfolio managers see scope for further gains into year-end. Risks remain tied to global growth, US monetary policy, and South Africa’s political landscape, but the rand is regaining credibility as a proxy for emerging-market risk appetite.

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