SA Rand Weakens as Demand for Western Currencies Surges
The South African rand weakened against major crosses in the foreign exchange market as investors sought positions in safer global currencies amid geopolitical pressures.
FitchSolutions lowered South Africa’s growth forecast from 1.5% (pre-conflict) to 1.3%, although in an escalatory scenario, we would expect growth to hold at around 1.0%.
It said the main transition mechanism is elevated prices denting domestic spending, exacerbated by policy rates staying higher for longer to mitigate inflation risks.
Gold has continued to trade in ranges as markets weigh US plans to escort ships through the Strait of Hormuz against tentative progress in US-Iran talks, First National Bank (FNB) said in a morning brief.
Hopes of diplomacy have tempered conflict risks, though the prolonged war has lifted energy prices and inflation concerns. This morning, the bullion was trading around $4 605.50 per ounce.
Brent crude has held around $108 a barrel following recent declines, as the US plans to help free ships stuck in the Strait of Hormuz and signs of progress in US-Iran talks eased tensions. Still, oil prices remain elevated this year, and OPEC+ has also agreed to only a modest increase in output.
The rand has weakened to about R16.62 per dollar, R22.57 per pound, and R19.48 amid investor flight to safety amid Middle East tensions, higher oil prices, and inflation worries. Global focus remains on the key central bank policy outlooks, First National Bank said in the morning brief. Kenyan Shilling Strengthens as Diaspora Remittances Surge
