The rand’s journey against the dollar in 2025

Unpacking the undervaluation, and economic implications

AS OF the end of October 2025, the South African rand is trading at R17.18 against the US dollar – a significant figure in the context of an estimated average exchange rate of R18.20 from January to September 2025.

Market analyses leveraging the Purchase Power Parity (PPP) exchange rate – calculated using inflation differentials between South Africa and the US from 2020 to 2025 – indicate that the Rand remains undervalued.

This disparity suggests an alignment closer to R14.30 in a conservative estimation, and potentially as low as R11.30, revealing a risk premium embedded in the current forex dynamics.

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