On the back of yesterday's local municipal elections, the rand has strengthened to around R16.35 to the dollar, its best level in two weeks.
Source: GCIS. The Deputy Minister in the Presidency, Nonceba Mhlauli exercises her democratic right by casting her special vote at Faerie Glen in Pretoria, Gauteng, on the second and final day of special voting ahead of the 2026 Local Government Elections.
This is supported by the weaker dollar, firmer gold, and improved risk appetite across emerging markets and commodity currencies.
If sustained, lower oil prices and a stronger rand could translate into cheaper fuel and a better inflation outlook ahead, said Andre Cilliers, currency strategist at TreasuryOne.
While yesterday’s municipal election results won’t be finalised until the weekend, with coalition negotiations then taking centre stage, their potential implications for investor confidence are already in focus.
With around a fifth of voting districts counted by Thursday morning, 5 November 2026, the ANC held 31.4% of the national vote, narrowly ahead of the DA on 30.2%, according to provisional Electoral Commission figures.
Dollar faces political headwinds
International markets have demonstrated how quickly electoral outcomes that defy expectations can translate into currency movements, Cilliers noted.
"The US midterm elections delivered a decisive win for the Democrats, exceeding what markets had priced in going into the vote. Betting markets had assigned only around a 70–78% probability of a clean Democratic sweep, meaning the scale of the result caught some investors off guard," he said.
The dollar has since weakened sharply.
The dollar's weakness reflects growing expectations of political gridlock in Washington over the remainder of Trump's term. A stronger-than-expected Democratic showing raises the prospect of less scope for major new fiscal spending, but also increases the risk of fresh standoffs over the debt ceiling and government funding.
Source: GCIS. President Cyril Ramaphosa casts his vote in the 2026 Local Government Elections at the Hyde Park High School in Johannesburg.
"Markets tend to read this combination as modestly dollar-negative, less fiscal stimulus reduces inflation and bond-supply concerns, while heightened political risk chips away at the dollar’s safe-haven appeal.
"Attention now shifts to how a Democratic-controlled chamber might approach US trade policy and AI regulation as areas like data-centre permitting and AI infrastructure guardrails return to focus, though no immediate policy changes are expected given the gridlock," Cilliers added.
"Importantly, this isn’t a one-way dollar story. The Fed is still widely expected to hike rates again in December, which should provide some underlying support and cap how far the dollar falls from here. Tomorrow’s US non-farm payrolls and unemployment data will be the next key test, giving markets fresh clues on whether that December hike stays on track."
Oil has collapsed more than 10%, dropping to around $94, on growing hopes that the US-Iran conflict is moving toward resolution. This has stripped a large chunk of the “risk premium” built into oil prices and, by extension, into the dollar as fears of a supply disruption from the conflict fade.
Gold has surged to around $4,116 an ounce, boosted by the weaker dollar and reduced safe-haven demand.
"With US bond yields also easing, gold has a double tailwind: a softer dollar makes it cheaper to buy, while lower yields reduce the opportunity cost of holding a non-interest-bearing asset," Cilliers said.
