02.04.202609:32:39UTC+00South African Rand Weakens

The South African rand weakened to nearly 17 per USD, retreating from an over one-week high of 16.8 per USD reached on April 1st, as rising risk aversion drove investors toward the safety of the US dollar and weighed on precious metals prices. Earlier optimism about a swift resolution to the Iran war faded after President Trump renewed threats of further escalation.

The rand is expected to remain under pressure as volatile oil prices threaten to fuel inflation and undermine growth prospects in net oil importer South Africa. The South African Reserve Bank recently reiterated that higher oil prices are likely to push domestic fuel costs up, further clouding the economic outlook. The central bank left its benchmark policy rate unchanged at 6.75%, citing upside inflation risks stemming from elevated energy prices and signaling that borrowing costs are likely to remain high for an extended period. Inflation is forecast to quicken from March onward as the effects of the war filter through to the broader economy.