JOHANNESBURG, Jan 2 (Reuters) – The South African rand made a steady start to the new year in slim trading on Friday, with many investors still away on holiday.
The currency ended 2025 nearly 13% stronger against the U.S. dollar, marking its biggest annual gain in 16 years.
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At 0739 GMT the rand stood at 16.5425 against the dollar , little changed from its previous close.
An ETM Analytics research note said that the muted session will give investors time to reflect on major themes likely to unfold through 2026 and influence the broader direction of the rand and other emerging market currencies.
South Africa’s benchmark 2035 government bond was little changed, with the yield up half a basis point at 8.215%.
In addition to global factors, domestic investors this year will be watching for progress on reforms to strengthen the country’s logistics and energy sectors. Weakness in those sectors has dented growth in Africa’s most industrialised economy.
ETM Analytics said the greater the progress, the more likely South Africa is to attract capital flows into its bond market, which is one of the most powerful determinants of how the rand will perform.
“It is essential to generate capital inflows into bonds if South Africa is to foster a virtuous cycle that has the potential to extend well beyond 2025 and sustain those gains through 2026.”
On the Johannesburg Stock Exchange, the Top-40 index (.JTOPI), opens new tab was last up 0.7%.The dollar opened 2026 on the same weak footing as it had ended 2025, with the Federal Reserve’s monetary policy outlook still dominating markets.
“Rate-cut bets for 2026 remain high, and Fed independence is a further concern, keeping the greenback under pressure,” said Wichard Cilliers, head of market risk at TreasuryONE.
Reporting by Sfundo Parakozov
Editing by David Goodman
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