South Africa’s Rand Shows First Coalition Since Mandela Means Business

No forecast last year offered any hint that the century’s diminishing rand would be among the few to retain most of its value against the US dollar, the currency titan in 2024. Then again, no one predicted that in May South Africa would elect its first ruling coalition since Nelson Mandela’s “government of national unity” ended apartheid 30 years ago. The ouster of the African National Congress as the parliamentary majority enables President Cyril Ramaphosa, a Mandela protege, to rescue the continent’s largest economy of 61 million people from a decade of economic, political and social desolation with pro-business reforms ushering in disinflation, lower interest rates and stronger growth.

The favorable exchange of rands for dollars for most of 2024 is the consequence of unprecedented demand for the debt securities of the “Rainbow Nation,” beginning in April, which signaled voters’ repudiation of the ANC and its failure to reverse the rising rate of violent crime, collapsing municipal sewage systems exacerbated by energy shortages and the rand’s 26% depreciation since 2017. South African bonds are the best performers since then among 18 emerging market countries, generating a total return of 14% in 2024, according to data compiled by Bloomberg. Even when the dollar reached its strongest level since November 2022 after Federal Reserve Chair Jerome Powell told reporters seven days before Christmas that the US central banks interest rate policy remains “meaningfully restrictive,” the rand keeps its halo.