US President Donald Trump’s erratic diplomacy is putting pressure on the dollar.
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The rand strengthened to R15.79 against the dollar on Wednesday morning, marking a massive 25% improvement since its recent low of R19.74 in April 2025.
Year-to-date, the rand has strengthened by almost 5%.
The surge in the rand is the result of dollar weakness across all currencies, driven by US President Donald Trump’s new threat of trade tariffs against Canada and South Korea, as well as fears over the Federal Reserve’s (Fed’s) independence in the lead-up to Trump’s selection of a new Fed chair.
The US president’s statements also keep boosting the gold price, which has surged to $5 300 per ounce – keeping up a run that has seen no fewer than 45 closing-time records set in 2025, and records on 14 of the 18 trading days of January thus far.
READ | ‘Sell America’ trade boosts rand against dollar
The rand has not closed stronger than R15.80 since 3 June 2022, when, economically and politically speaking, the world was a somewhat different place:
- In June 2022, the Russian-Ukrainian war was in its fourth month following Russia’s invasion of its neighbour on 24 February. The war continues, even if there are fewer headlines about it.
- The US Supreme Court overturned the landmark abortion case Roe v. Wade.
- Joe Biden was the 46th president of the United States, both succeeding and preceding Trump.
- Queen Elizabeth II celebrated her Platinum Jubilee – or 70 years as queen of England – dying only three months later, on 8 September 2022, at the age of 96 years.
- In economics, inflation hit 41-year highs in the UK (11.1%) and the US (9.1%). SA’s inflation was also sky-high at 7.4%, but peaked a month later, in July, at 7.8%.
- SA’s prime interest rate was at 8.25% and peaked at 11.75% in May 2023, before gradually declining to 10.25% by November 2025.
Nedbank’s macro-economic team is optimistic that the rand could strengthen to R15.70, but warns that some profit-taking is becoming likely, which could reverse the run.
Regarding the gold price, James Luke, senior portfolio manager for gold and commodities at Schroders, says the 65% price gain in the year dwarfed anything seen in the 2000s bull market. “In the modern era, only the early and late 1970s witnessed this scale of increases.
“This price trend applies to gold as well as the broader precious metal complex. The question at the front of investors’ minds is: Can this price trend be sustained?” says Luke.
Interestingly, the 1970s rally in the gold price and a weaker dollar was also caused by monetary policy concerns. US President Richard Nixon pressured the Fed to reduce interest rates before the 1972 election. “The result was a dollar credibility crisis and a huge gold bull market with three consecutive annual price increases of 40% plus.”
It was also the end of the Bretton Woods monetary system and dollar convertibility into gold.
