In January 2025, exchange rates were affected by conflict. Political tensions in South Africa and concerns over U.S. tariffs led to the depreciation of the South African rand and its pegged currencies. Meanwhile, ongoing conflict in Sudan continued to weaken the Sudanese pound. In January 2025 we saw two currencies with changes over 5% for the month.
Global Currencies Losing Value Against the U.S. Dollar:
ZAR– South African Rand
Political turmoil has contributed to the depreciation of the South African rand. Tensions escalated between the Democratic Alliance (DA) and the African National Congress (ANC), South Africa’s two main governing parties. After the ANC enacted a new law allowing government land expropriation, the DA disputed the move, arguing it violated their coalition agreement from the previous year. This uncertainty unsettled foreign investors, prompting stock sell-offs. Additionally, tariff threats from the U.S., South Africa’s second-largest trading partner, further pressured the rand.
As a result, the Swazi lilangeni, Namibian dollar, and Lesotho loti, which are pegged to the rand, also depreciated.
SSP – South Sudanese Pound
Since the end of its civil war in 2018, South Sudan has struggled to maintain economic and political stability. The ongoing war in neighboring Sudan has played a major role in hindering these efforts. The conflict has damaged an oil pipeline vital to South Sudan's economy and sparked a massive influx of refugees into the country. These issues have drained resources and caused the South Sudanese pound to lose value.
Exchange Rate Changes:
Every month we provide updates on currency change of over 5% via our blog AIRSHARE. For additional insights on inflation and exchange rate fluctuations, check out our quarterly online report Data Points. We include selected 3-month Exchange Rate fluctuations of more than 5%.
Should the COLA be updated?
One benefit of the COLA is that it is paid separately from salary and can be updated for changes in economic conditions – both up and down. The COLA can be influenced by two factors:
- Exchange rates: as the exchange rate between the home and host locations changes, the COLA is updated to capture the impact of a strengthening or weakening home / host currency.
- Inflation / deflation: Additionally, both the market basket at home and at host are affected by inflation and deflation, so the COLA is updated for those as well.
Updating the COLA for exchange rate and inflation allows the company to make sure the employee is protected against economic changes.
As a result of changing economic circumstances, the COLA can increase or decrease. Although COLA changes keep the employee balanced, the Global Mobility team may need to field any employee questions about COLA decreases.
Back to Basics COLA and Exchange Rates Webinar
To hear more about the basics of the COLA and exchange rates, watch our recent webinar linked here.
