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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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