The South African rand weakened to around 17.1 per USD, returning to its lowest levels since November 2025, as continued uncertainty over the duration of the Iran war dampened risk appetite. The currency has experienced heightened volatility since the Middle East crisis began in late February, reflecting South Africa’s sensitivity to oil price swings.
The key concern is that a protracted conflict and elevated oil prices could push inflation higher, undermining the central bank’s recent success in keeping it in check. While inflation is currently close to the new 3% target, it is expected to rise in the coming months. In addition to oil, higher electricity and food prices are also likely to fuel further upward pressure on inflation.
Against this backdrop, the South African Reserve Bank is widely expected to leave its policy rate unchanged at 6.75% this week, as policymakers contend with one of the most uncertain economic environments in recent years.
