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Perhaps the best way to measure the progress of South Africa as a country is to look at our currency – especially against the so-called hard currencies of the Western World. Its strength or weakness gives a very good overall picture of how the country is doing economically, politically and in terms of its image with overseas investors.

As an emerging economy, South Africa is not regarded as a poor country, but rather as one which is striving to become first world. For overseas investors this typically means a country and a currency which offers high risk and high potential return. Whereas a 10-year US Treasury Bill can offer the international investor a return of 4,8%, a South African 10-year government bond offers around 8,8% - that is 4% better, if the investor is prepared to take the risk of investing here.

We have a number of advantages over other emerging markets. Perhaps most importantly, we have relatively low inflation. In fact, due to the tireless efforts of Lesetja Kganyago, Governor of the Reserve Bank, our inflation rate is very comparable to many First World countries – and certainly far better than many of the other emerging economies. For example, Turkey’s inflation rate is 31,5%, Argentina is at 33,8% Egypt is at 14,9% and Columbia is at 6%.

We are generally grouped among those less risky emerging economies with lower inflation rates like Brazil (4,6%), India (4,4%), Mexico (3,4%), Indonesia (2,9%), and South Korea (2,8%). These are very comparable to the inflation rates of First World economies like Europe (3,3%), the United Kingdom (2,9%) and America (3,4%).

Approximately $19bn worth of rands are traded in our currency market every day on average. This makes it a highly liquid and very free currency exchange. Overseas investors can quickly take or sell large positions in what is a strong and well-organised market. This has tended to mean that the rand has become a proxy for all emerging economies. When international sentiment is risk-on they pile into our currency and government bonds. When it is risk-off, as it was when Trump began his war with Iran, they sell out quickly.

But overall, for at least the past 17 months the rand has been steadily appreciating against most first world currencies. In our view, this is related to the stabilising impact of the government of national unity (GNU) and the fact that the ANC is no longer in complete control. This together with the various initiatives set in motion by President Ramaphosa have meant that the economic environment has been steadily improving since April 2025.

On 10^th April 2025 one euro would have cost you R21,90 and today it costs R18,53. On the same day, one British pound would have cost you R25,34 whereas today it costs only R21,56 and of course over the same time period the US dollar has fallen from being worth R19,75 to being worth R15,96. Consider the chart:

What is significant about this chart is that it clearly shows the steady improvement in international sentiment towards South Africa. The massive, well-informed international investors of the world are betting on our country and putting their money here instead of elsewhere. That is a significant vote of confidence and one which many South Africans caught up in the cut and thrust of daily life here do not appreciate.

In our view, the rand is about to break below its previous cycle low of R15.79 to the US$ made on 29^th January 2026. The outcome of the municipal elections on 3^rd November 2026 will have a significant impact. If the ANC loses further ground and the DA gains ground (which is what we believe will happen) then you can expect the rand to appreciate further.

A stronger rand is good for everyone in South Africa. It means lower fuel prices, lower inflation, lower interest rates, more stability and a better future for everyone involved in the economy. It is the most telling and reliable indicator of our progress as a nation.