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Rand’s Winning Streak: What a US-China Trade Reset Means for South Africa’s Currency

Published

4 months ago

May 13, 2025

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South Africa’s notoriously volatile currency, the rand, is enjoying its longest winning streak of 2025 — and analysts are pointing to renewed optimism around global trade as a major driver.

As of Monday afternoon, the rand was trading at R18.30 to the US dollar, climbing from R18.21 earlier in the day. According to Morningstar data, these are some of the best levels the local currency has seen this month — especially considering it had spiked to R19.76 in early April following former US President Donald Trump’s tariff announcement.

Trade Talks Push Risk Appetite Higher

Analysts say the rand’s recent strength is linked to positive signals from the US-China trade front, including a temporary easing of tariffs and a renewed commitment to dialogue.

“This is the most sustained recovery we’ve seen in 2025,” said Wichard Cilliers, head of market risk at TreasuryONE. “The belief that global trade could pick up again is good news for South Africa, which exports a significant amount of raw materials to China.”

Trump called the meetings a “total reset” of trade relations, with officials confirming a 90-day tariff pause and a 15% reciprocal tariff cut. Though details are still emerging, markets have responded positively.

Export-Led Boost for SA

South Africa’s trade balance stands to benefit directly if Chinese demand increases and commodity prices continue to strengthen.

Nolan Wapenaar, co-chief investment officer at Anchor Capital, said terms of trade have improved:

“Oil prices have come down, and gold has firmed. That mix is good for the rand. If this trend holds, we could see the rand strengthen toward the high R17s.”

Wapenaar added that the rand has started recovering from “significant weakness” brought on by earlier shocks, including tax policy missteps and tariff uncertainty.

Still a Risky Ride

While the short-term outlook appears brighter, economists caution that the rand’s fate still hinges on global political stability.

“Risk aversion has eased, which is helping emerging market currencies,” said Annabel Bishop, chief economist at Investec. “But downside risks remain, especially if there are surprises from the US or China.”

Bishop believes the rand could hit R18.00 to the dollar by the end of June, but warns that volatility may return if talks falter or new tariffs emerge.

Why It Matters for South Africans

A stronger rand can translate into lower fuel prices, reduced import costs, and potential relief for inflation-weary consumers. For businesses reliant on foreign inputs or international trade, the current currency climate is a welcome break from months of pressure.

Yet as history shows, the rand can swing wildly — and fast.

For now, South Africa’s currency is riding the wave of global optimism. But whether it can hold depends on how well the world’s superpowers stick to their trade promises.

Key Takeaways:

The rand is on its longest winning streak of 2025, now trading near R18.30.
US-China trade talks have eased global uncertainty, supporting risk assets.
Export-linked factors like stronger gold prices and lower oil costs are helping South Africa.
Economists expect the rand could strengthen further, but caution volatility could return.