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USD/ZAR forecast: South African Rand nearing all-time lows against the mighty dollar

By Kathryn Davies

Edited by Georgy Istigechev

17:26, 18 October 2022

A man holds a new South African banknote at the value of one hundred South African Rand
The USD/ZAR currency pair has gained over 10% so far in 2022 – Photo: Phill Magakoe / AFP via Getty Images

The South African rand has fallen over 10% against the US Dollar (USD) so far this year on formidable USD strength and risk-off trade.

The US Dollar Index (DXY), which measures the value of the greenback against a basket of other global currencies, such as the euro, Japanese yen and British pound, has risen over 15% this year on the back of aggressive US Federal Reserve (Fed) monetary policy, as the central bank aims to bring rampant inflation under control.

The Fed’s target policy rate has risen from the near-zero level in March 2022 to the current 3.00%-3.25% range. It has triggered a global repricing of currencies, stocks, bonds and other assets. The USD/ZAR currency pair has been affected, shedding over 10% of its value year-to-date (YTD).

USD/ZAR Live Price Chart

With the Fed set to continue hiking rates aggressively, will USD/ZAR continue rising, or is there light at the end of the hiking cycle for the South African rand?

Read on for the latest South African rand news and analysts’ USD/ZAR forecasts.

What is USD/ZAR?

USD/ZAR is the US dollar and South African rand pair, which shows what one USD is worth in South African rands. For example, if USD/ZAR is 18, it means that 18 South African rands are worth $1.

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What is the ZAR?

The ZAR is the national currency of South Africa. It was introduced in 1961, replacing the South African pound at a rate of two to one. In the next decade or so, the rand was worth 1.5 against the USD. However, since then, the rand has depreciated significantly, meaning that more ZAR are needed to buy one USD.

The rand is issued by the South African Reserve Bank (SARB). The central bank is also responsible for maintaining price stability, occasionally intervening in the forex markets.

What drives the rand?

The rand’s value has historically been closely tied to the value of gold – South Africa’s main export – a correlation that remains in place today. Gold represented 10% of the country’s total exports in 2020, or $13 billion. In addition to gold, South Africa also exports other commodities such as coal, palladium and iron ore to Europe, the US and China.

In addition to commodity prices, the value of the rand is also vulnerable to risk sentiment and major global economic developments. As an emerging markets currency, investors naturally look to sell out of the rand in times of higher global economic uncertainty, instead favouring safe havens such as the Japanese yen or the US dollar.

For example, the rand fell sharply in the 2007-8 financial crisis, dropping 35% against the USD over a year from January 2008-9. The rand also fell sharply during the Covid-19 pandemic, weakening from 15 rands to 17 rands per USD.

How has USD/ZAR moved in the past?

The USD/ZAR has been steadily climbing higher over the past decade. Back in 2012, USD/ZAR traded at around 7.5. By late 2015, the rand had devalued significantly to 14.00 before rising to 17.87 in early January 2016.

The spike was short-lived, and the rand strengthened to 11.60 over the following two years. From here, the USD/ZAR climbed higher as the rand weakened to a record low of 19.3 against the USD as the pandemic hit before rising to 13 by mid-2021.


The pair kicked off 2022 at 16. They trended steadily lower across the first three months of the year to a 2022 low of 14.44. From that low point, USD/ZAR started forming a series of higher highs and higher lows, rising to 18.5 on October 13. The pair trades at 18.02 at the time of writing (18 October).

Factors affecting the USD/ZAR rate

Let’s take a look at the latest news and key factors influencing the USD/ZAR currency pair.

Risk-off and hawkish Fed bets boost USD/ZAR

The South African rand, along with other emerging market currencies, has struggled against the strong USD. Emerging market currencies are highly susceptible to global drivers such as the US dollar.

The US dollar has soared in recent weeks, with the US Dollar Index (DXY) rising to 114.78, a 2-decade high, as the US Federal Reserve (Fed) adopts a more hawkish stance to fight persistently hot inflation. Furthermore, global recession fears have driven investors toward the safe haven US dollar and away from riskier emerging market currencies.

Recession fears and an energy crisis in Europe are both fueling risk aversive behaviours among investors. However, it’s not all bad news for South Africa. Slowing natural gas supplies from Russia to Europe have meant that many European nations are turning towards coal. South Africa is a major coal producer, with coal exports rising eight-fold in the first half of the year alone.

Manufacturing output for South Africa beat forecasts in September, rising 2.1% month-over-month (MoM) and 1.4% year-over-year (YoY), reflecting the increase in demand for South African exports.


156.71 Price
-0.460% 1D Chg, %
Long position overnight fee 0.0108%
Short position overnight fee -0.0190%
Overnight fee time 21:00 (UTC)
Spread 0.014


0.67 Price
-0.300% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00006


0.67 Price
-0.300% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00006


1.09 Price
+0.050% 1D Chg, %
Long position overnight fee -0.0087%
Short position overnight fee 0.0005%
Overnight fee time 21:00 (UTC)
Spread 0.00006

While this offers some support to the economy and the rand, it is still insufficient to battle deteriorating global risk sentiment or the falling price of gold as recession fears rise.


Gold has dropped just shy of 20% from its $2,070 peak in March to current levels (18 October). The precious metal has spent most of the past month below $1,700 an ounce. As one of South Africa’s largest exports, this can affect the rand’s value.

Gold prices have fallen steadily as the USD dollar strengthens, hurting demand for the USD-denominated non-yielding precious metal.

Gold 5-year price chart

SARB monetary policy

The South African Reserve Bank (SARB) is in a tightening cycle as it hikes rates to tame inflation and keep pace with the Fed. The SARB hiked rates by 75 basis points (bps) to 6.25% in September and is expected to hike them by a further 75 basis points in November, even as inflation slowed for the first time in seven months.

Should inflation continue to moderate, the SARB could slow the pace of rate rises, but that could depend on what the Fed does going forwards.

Sharp interest rate rises by the Fed risk eroding the differential, which makes emerging market assets attractive to foreign investors and could drag the rand lower.

USD/ZAR: Analysts’ opinions

So is the rand expected to continue weakening against the USD, or could we expect to see a turnaround in the coming months?

In their dollar to rand forecast, analysts at Netherlands-based banking group ING consider that the rand will weaken to 18.50 in the final quarter of 2022, before strengthening across the first half of 2023 to 17.50 in Q1, 17.25 in Q2 and 17.00 by the third quarter of next year.

ING analysts Chris Turner, Francesco Pesole and Frantisek Taborsky said that:

“A turn in the USD will require convincing evidence of a reversal in the Fed cycle plus some attractive investment destinations overseas. Neither looks likely this year.”

Meanwhile, analysts at German lender Commerzbank are less upbeat. Their USD/ZAR prediction is for the pair to continue rising towards 20. They noted that “due to the threat of a global recession, the growth outlook remains weak.”

USD/ZAR forecasts for 2022 and beyond

As of 4 October, according to analysts at TradingEconomics, the South African rand was expected to continue weakening. It forecast that USD/ZAR could be at 18.82 by the end of the quarter and 20.30 in one year’s time.

The USD/ZAR forecast from algorithm-based forecaster Wallet Investor also predicted that the South African currency could weaken in the near term, with USD/ZAR ending 2022 at 18.10. In the longer term, its USD/ZAR forecast for 2025 saw the rate rising to 18.76 by the end of the year.

Wallet Investor’s USD/ZAR prediction for 2027 saw the pair at 19.43.

Algorithm-based service AI Pickup forecast the rand to strengthen in the coming years. The service’s forecast for 2027 is 13.8. Its USD/ZAR forecast for 2030 was lower still at an average of 12.31.

The bottom line

It is important to remember that analysts’ and algorithm-based USD/ZAR forecasts can be wrong. Always conduct your own due diligence before trading, looking at the latest news, technical and fundamental analysis, and analyst commentary.

Past performance does not guarantee future returns. And never trade money that you cannot afford to lose.


Why has USD/ZAR been rising?

The USD/ZAR has been rising as the US Federal Reserve raises interest rates more aggressively than the South African Reserve Bank (SARB). Furthermore, risk aversion has dominated global trading, which supports demand for the safe haven USD over riskier emerging market currencies such as the ZAR.

Will USD/ZAR go up or down?

Whether USD/ZAR goes up or down can depend on the path of monetary policy for the Fed and the SARB. It is also afected by the broader market mood and commodity prices.

Always remember to do your own due diligence before making an investment decision. And never invest or trade money you cannot afford to lose.

When is the best time to trade USD/ZAR?

The best time to trade USD/ZAR is usually between 10 am and 5 pm GMT, when both the London and New York markets are open as this should be when liquidity is at its highest.

Is USD/ZAR a buy, sell or hold?

Only you can decide the right choice for you concerning USD/ZAR. Remember to do your research, considering each country's economic outlook, GDP, imports, exports, inflation data, and foreign exchange reserves. Never invest money you cannot afford to lose.

Markets in this article

1.08907 USD
0.00055 +0.050%
1.29392 USD
0.00307 +0.240%
US Dollar Index
103.827 USD
-0.104 -0.100%
156.714 USD
-0.719 -0.460%
2406.65 USD
6.62 +0.280%

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