South African rand weakens as US-Iran blockade threat drives oil above $100
South Africa's rand weakened on Monday as investors reacted to a US-Iran standoff that threatened oil flows through the Strait of Hormuz, pushing crude prices back above $100 a barrel and lifting the dollar.
At 0639 GMT the rand traded at 16.5650 against the dollar, about 0.8% down from its Friday close.
The United States announced over the weekend that it would enforce a naval blockade on all shipping entering or leaving Iranian ports and coastal waters in the Arabian Gulf and Gulf of Oman from Monday, following the collapse of direct talks in Islamabad.
Global oil prices surged back above $100 a barrel and the U.S. dollar strengthened against a basket of currencies
ETM Analytics said that, for South Africa, already grappling with high fuel costs and energy security concerns, the crisis threatens to raise import costs, disrupt tanker routes previously protected by its friendly status, and intensify domestic inflationary pressures.
"The ZAR will come under pressure, and South Africa's alignment with Iran appears increasingly unhelpful. One could extend this argument to the broader BRICS+ bloc, which has offered limited support to Iran and is unlikely to provide meaningful backing to South Africa," ETM Analytics said in a research note.
South Africa's benchmark 2035 government bond weakened in early deals, as the yield rose 11.5 basis points to 8.515%
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