The South African rand appreciated to around ZAR 16.5 per US dollar at the start of August, extending its rebound from the more than three‑month low of 16.98 hit on July 24. The move was supported in part by improving risk sentiment as oil prices fell sharply, following growing optimism over renewed US‑Iran negotiations. President Donald Trump announced that fresh talks with Tehran would begin on Monday, easing concerns about potential supply disruptions and putting downward pressure on crude.
On the domestic front, survey data signaled a further loss of momentum in South Africa’s manufacturing sector in July, as softer external demand and persistent geopolitical uncertainty weighed on activity. In monetary policy developments, the South African Reserve Bank surprised markets last month by leaving its benchmark interest rate unchanged, defying expectations for a 25‑basis‑point hike.
Inflation dynamics continued to firm: headline consumer price inflation accelerated to 5.0% year‑on‑year in June, the highest rate in two years, while core inflation rose to 4.1%, its strongest reading since September 2024. Both indicators remained above the upper end of the SARB’s 3% ±1 percentage point target band.
