At 07:03 GMT, the rand traded at 16.0475 against the dollar, up roughly 0.4% from its previous close and hovering near its strongest level since June 2022.

The greenback weakened slightly against a basket of currencies,while gold surged past $5,000 per ounce, extending a historic rally driven by investors seeking safe-haven assets amid geopolitical uncertainties.

The rand, which often moves in step with global risk sentiment and U.S. policy shifts, has gained around 3% against the dollar since the start of the year.

Analysts say its exposure to gold, platinum, and other commodities that move inversely to the U.S. currency could push it past the 16.00-per-dollar threshold in the coming days.

“(This will) give the SARB something to think about as they deliberate whether there is enough room to cut rates so early in the year, despite the inflation rate remaining well above the 3% target,” said a note from ETM Analytics, highlighting the balancing act facing the central bank.

The SARB reduced its main lending rate by 25 basis points in November, citing scope to ease policy amid an improved inflation outlook. Markets will closely monitor Thursday’s meeting for indications on whether further cuts are likely.

South Africa’s benchmark 2035 government bond also showed strength in early trading, with yields falling 7.5 basis points to 8.07%.

Source: Africabusinessinsider