FX.co ★ South African Rand Weaker

The South African rand slipped to around 16.9 per USD as global risk appetite weakened ahead of US President Trump’s deadline for Iran to reopen the Strait of Hormuz or face possible military action. The resulting surge in uncertainty unsettled global markets and drove oil prices higher, amid ongoing disruptions to energy supplies.

The rand has been notably volatile since the conflict erupted in late February, underscoring South Africa’s sensitivity to oil price fluctuations. The country now faces growing risks of significant inflationary pressures in the months ahead, a development that could shape the path of interest rates.

In response, the South African Reserve Bank adopted a wait-and-see stance at its January meeting, opting to keep rates on hold while signalling its readiness to hike should inflationary pressures intensify. The central bank is expected to maintain relatively high interest rates for the foreseeable future to safeguard its new inflation target.