The risk-sensitive South African rand started the week with a sharp depreciation as investors, concerned about the sharp rise in oil prices and the possible impact on inflation and global growth, sold risky assets and took profits on some of their most profitable positions.
The rand traded at 16.8050 per dollar at 6:20 a.m. local time on Monday (9), down 1.8% from the previous close and approaching its weakest level since mid-December 2025.
The South African government’s benchmark bond maturing in 2035 also weakened in early trading, with the yield rising 1.5 basis points to 8.505%.
Crude oil prices rose more than 25% as the escalating conflict between the United States (US) and Israel with Iran led some major Middle Eastern producers to reduce supply amid fears of a prolonged disruption to shipping through the Strait of Hormuz.
Analysts say the rand is likely to remain under pressure as increased global risk aversion and higher oil prices weigh on South Africa, which is a net energy importer.
Domestically, investors will be watching closely this week for the release of fourth-quarter gross domestic product (GDP) data by the national statistics agency, as well as January mining and manufacturing figures, for signs of the state of the continent’s most industrialized economy.
“Until there is clarity on the duration and scale of the conflict, markets are likely to remain volatile, with investors favoring defensive positions,” said Andre Cilliers, currency strategist at TreasuryONE.
Source: Reuters
