The South African (SA) Rand began the week at its lowest level in four months as escalating hostilities in the Middle East kept oil prices high, stoking inflation worries ahead of a much-anticipated interest rate decision.
Rand traded at 17.2275 against the Dollar, down 1.3% from its previous close, at its weakest level since late November 2025.
On Saturday, United States (US) President Donald Trump threatened to “obliterate” Iran’s power plants if it did not fully reopen the Strait of Hormuz within 48 hours, barely a day after he talked about “winding down” the war, now in its fourth week.
Meanwhile, Iran said on Sunday it would strike the energy and water systems of its Gulf neighbours in retaliation if US President Donald Trump follows through with his threat.
Analysts expect continued pressure on the Rand after a torrid three weeks, amid concerns that rising oil prices will lift inflation in net energy-importer SA.
Domestically focused investor attention will be pinned on the central bank’s rate decision on Thursday.
Economists polled by Reuters expect the bank to keep its main lending rate steady at 6.75%.
The SA Reserve Bank’s governor told Reuters earlier this month that the bank will revise its risk scenarios for its next policy meeting as the Middle East conflict continues to push oil prices higher.
Other economic indicators due this week include the composite leading business cycle indicator on Tuesday, and producer inflation data on Thursday.
Key SA exports gold and platinum fell 5% and 9% respectively, further straining local assets.
SA’s benchmark 2035 government bond was flat in early deals, with the yield at 9.2%.
–Reuters–
