The South African rand has traded in a narrow range of around 16–16.5 per US dollar since May, amid a resilient US dollar and volatility in key precious metals, particularly gold and PGMs. The Middle East conflict fuelled global uncertainty and strengthened demand for the safe-haven greenback.
Following the US–Iran interim deal reopening the Strait of Hormuz, oil prices declined, easing inflationary pressures.
Markets remain hopeful for an end to the conflict, despite a recent flare-up in hostilities that caused a stalemate in talks.
Meanwhile, SARB Governor Lesetja Kganyago noted inflation expectations have moved above the central bank’s 3% target, supporting the May rate hike and suggesting further tightening may be required.
The central bank lifted rates in May for the first time in three years, in a defensive move against second-round effects from the oil shock.