South Africa’s (SA) Rand weakened on Monday as investors reacted to a United States (US) and Iran standoff that threatened oil flows through the Strait of Hormuz, pushing crude prices back above $100 a barrel and lifting the Dollar.
The Rand traded at 16.5650 against the Dollar, about 0.8% down from its Friday close.
The US announced over the weekend that it would enforce a naval blockade on all shipping entering or leaving Iranian ports and coastal waters in the Arabian Gulf and Gulf of Oman from Monday, following the collapse of direct talks in Islamabad.
Global oil prices surged back above $100 a barrel, and the US Dollar strengthened against a basket of currencies.
ETM Analytics said that, for SA, already grappling with high fuel costs and energy security concerns, the crisis threatens to raise import costs, disrupt tanker routes previously protected by its friendly status, and intensify domestic inflationary pressures.
“The Rand will come under pressure, and SA’s alignment with Iran appears increasingly unhelpful.
One could extend this argument to the broader Brazil, Russia, India, China, and SA bloc, which has offered limited support to Iran and is unlikely to provide meaningful backing to SA,” ETM Analytics said in a research note.
SA’s benchmark 2035 government bond weakened in early deals, as the yield rose 11.5 basis points to 8.515%
–Reuters–
