ZAR Appreciation Against Dollar Could Hit 15.64 if Economic Reforms Deliver Results

MEVHunterX · 2026-02-13T05:16:16+00:00

The South African Rand is undervalued, with a consensus among market experts predicting potential appreciation if reforms succeed. A survey suggests fair value at 15.64 ZAR per USD, but the South African Reserve Bank has a cautious outlook, forecasting a weaker Rand by 2026.

MEVHunterX

2026-02-13 05:16:16

Abstract generation in progress

The South African Rand is currently trading significantly below its fair value according to a comprehensive survey of investment professionals and economists. Market participants are pricing in substantial upside potential for ZAR if the government’s reform agenda gains traction. The analysis reveals striking divergence in how different market observers view the currency’s equilibrium level against the US dollar, with implications for traders and investors monitoring the dollar to ZAR exchange rate dynamics.

Market Shows Consensus on Rand Undervaluation

Survey data covering 14 market participants indicates an average fair value expectation of 15.64 ZAR per US dollar, suggesting meaningful appreciation opportunity from current levels. The responses reveal that exactly half of respondents believe the currency is undervalued, three assess it as fairly priced, and four see it as overvalued. This distribution demonstrates the diversity of market opinion. The estimated fair value range spans from 12.23 to 18, highlighting the spectrum of views on where the dollar to ZAR rate should equilibrate. These valuations suggest the market perceives room for ZAR strength, driven by confidence in potential economic improvements.

Fiscal Policy Emerges as Key Driver for 2026

Frank Blackmore, an economist at KPMG in Johannesburg, projects the Rand will reach 15.50 against the dollar by year-end 2026. He identifies fiscal policy as the primary catalyst for currency performance, emphasizing that the national budget announcement scheduled for February 25 will serve as a critical barometer of government commitment to structural reforms. This makes the upcoming fiscal statement a crucial test case for whether policy intentions translate into market-moving action.

Central Bank Paints Cautious Picture

In contrast to the more bullish market view, the South African Reserve Bank adopts a notably more conservative stance. The central bank forecasts the Rand will weaken to 16.73 by the second quarter of 2026, with the dollar to ZAR rate potentially ranging between 16.54 and 17.10 by the end of 2028. This divergence between market expectations and official forecasts underscores uncertainty about the economy’s trajectory and reform execution. The SARB’s projection suggests it remains skeptical about the pace and effectiveness of policy changes, even as investors and economists embrace more optimistic scenarios for ZAR appreciation.

The coming months will test whether the Rand’s undervaluation narrative gains credibility through tangible economic progress and effective government initiatives.

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.