International fuel markets trade in US dollars. South African buyers pay in rand. The exchange rate between the two is therefore one of the two main drivers of the Basic Fuel Price, alongside international product prices.
The mechanism
Each day during the review period, the department converts international product prices into rand using the prevailing exchange rate. The monthly adjustment reflects the average. When the rand weakens, the same dollar price buys fewer litres; when it strengthens, fuel becomes cheaper in rand terms.
Offsetting and amplifying effects
The two drivers can work against each other. A stronger rand can soften the impact of rising oil prices, while a weaker rand can erase the benefit of falling ones. In October 2026, the rand was almost unchanged (about R16.21 to the dollar), so virtually the entire increase came from higher product prices.
Planning for currency risk
Large consumers cannot control the exchange rate, but they can reduce surprises:
- Use term supply agreements with a transparent, formula-based price.
- Align budget assumptions with forward currency views from your bank.
- Track the mid-month over- or under-recovery data published by the Central Energy Fund.
Our supply and trading team can help you structure supply around these variables.
Published by African Energy Enterprises. This article is general information and does not constitute legal, tax or financial advice. Regulated prices and rules change; confirm current figures with the relevant authority.
