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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
July 9, 2025

South African

Gold and Foreign Exchange Reserves

May 2025

The South African International Liquidity Position, represented by Net Gold and Foreign Exchange Reserves, increased in USD terms but slightly declined in Rand terms due to the Rand’s appreciation against the Dollar in June 2025. The Rand strengthened by nearly 30 cents against the Dollar in June, following a 60-cent appreciation in the previous month. Reserves rose by approximately $412 million, following a nearly $500 million increase in May 2025. This growth was partly driven by a 40.6% year-over-year increase in gold prices in June 2025 compared to the same month in 2024.

Foreign reserves in Dollar terms also increased from May to June, reflecting the Reserve Bank’s strategy to purchase more Dollars to bolster South Africa’s international liquidity amid current global market uncertainties. This approach is also influenced by the impending expiration of trade tariff exemptions related to “Liberation Day,” which are set to expire on August 1, 2025.

Key commodities such as gold, oil, platinum, and coal provide important insights into South Africa’s mining sector and inflation outlook. These trends will be vital in assessing inflation prospects amid international developments and potential trade restrictions with the US at the end of July.

Monitoring these movements is essential, as inflation expectations will influence the South African Reserve Bank’s (SARB) interest rate decisions later in 2025. A stable Rand and lower oil prices support favourable inflation forecasts. However, ongoing global geopolitical tensions and potential changes to trade agreements like AGOA could lead to rapid market shifts.

With recent US tariffs and the Federal Reserve holding interest rates steady in May 2025, the Rand is expected to experience continued volatility, impacting both international markets and South Africa’s economic outlook for the remainder of 2025.

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More Coverage

A Watershed Moment: Global Ceasefire and Massive Oil Correction Offer Crucial Relief for the SA Economy

A sudden global shift has delivered much-needed relief for South Africa. Following a Middle East ceasefire, oil prices have dropped sharply and the Rand has strengthened—easing pressure on fuel costs and inflation. While earlier price spikes still weigh on the outlook, this combined correction offers a critical window for economic stability, improved consumer confidence, and renewed growth momentum.

The Great Fuel Buffer

South Africa finds itself balancing global energy shocks with decisive local action. As rising oil prices threaten to strain consumers and key industries, government intervention has softened the immediate impact—highlighting both the urgency of the moment and the need for smarter, more resilient fiscal tools to manage future volatility.

SARB opts for Strategic Resilience

The South African Reserve Bank has opted for a “hawkish hold,” maintaining the repo rate at 6.75% despite headline inflation hitting a milestone low of 3.0%. Governor Lesetja Kganyago emphasised that while the inflation target has been met, the MPC remains wary of a potential “energy tax” on the economy, driven by global oil prices surging above $100 per barrel. Consequently, the Bank has adopted a cautious, forward-looking stance, slightly lowering the 2026 GDP growth forecast to 1.1% to account for these external shocks and ensure long-term currency stability.

Navigating the Geopolitical Crosswinds

South Africa faces renewed inflation risks despite brief market relief, driven by rising fuel costs and import dependence. The SARB is likely to hold interest rates to protect price stability.

The Perfect Storm:

This morning, South Africans received what should have been a crowning achievement for the South African Reserve Bank (SARB). Data from Stats SA revealed that the Consumer Price Index (CPI) cooled to 3.0% in February, down from 3.5% in January. This lands the country perfectly on the SARB’s new, more ambitious inflation target.