FX.co ★ South African Rand at Near 2-Week Low

The South African rand weakened beyond 16.4 per USD, trading near its lowest level in almost two weeks, as escalating tensions between the US and Iran pushed investors toward the safety of the US dollar. The rand also came under pressure from declining prices for key precious metals, including gold and PGMs.

US President Trump stated that the tentative ceasefire with Iran was "over", heightening the risk of renewed military conflict. This followed fresh strikes between the two countries, which reignited worries about disruptions to oil supplies through the Strait of Hormuz. Such disruptions could fuel renewed inflationary pressures and potentially lead to further interest rate hikes.

SARB Governor Lesetja Kganyago recently noted that inflation expectations have moved above the central bank’s 3% target, a development that supported the rate hike in May and suggests that additional policy tightening may be necessary. The SARB’s Monetary Policy Committee is scheduled to meet later this month to set interest rates.