Cape Town – The South African rand surged more than 2% in early trade on Wednesday, reaching its strongest level in over a month against the US dollar, as easing geopolitical tensions triggered a broad rally in emerging-market assets and reversed recent losses.
According to Daily Investor, the currency recovered some of its recent declines linked to the US–Israeli conflict in Iran after US President Donald Trump agreed to a two-week ceasefire, easing fears of energy-driven inflation and improving global risk sentiment.
The report said that “since the announcement of a two-week ceasefire between US-Israeli forces and Iran, the rand has strengthened by almost 3% to trade at R16.37 to the dollar at 09:00.”
It added that emerging-market assets also strengthened, with the MSCI EM stock index rising 4.3% and its currency gauge gaining 0.8%, as oil prices fell sharply and investors moved back into risk assets.
Stanlib chief economist Kevin Lings noted that emerging markets respond differently to oil shocks depending on whether they are importers or exporters, helping explain the rand’s sensitivity to global developments.
Market strategist Brendan McKenna of Wells Fargo said: “High beta names that have been beaten up a little bit lately can benefit from this, including South Africa, Chile and most of the oil importers in emerging Asia.”
He cautioned that sentiment could reverse if geopolitical risks persist, adding: “If we don’t make progress a geopolitical risk premium will get embedded back into EM asset prices soon enough.”
Separately, according to SABC News, “South Africa’s risk-sensitive rand firmed more than 2% in early trade on Wednesday, paring losses amassed since the start of the US-Israeli war on Iran after President Donald Trump agreed to a two-week ceasefire, easing fears of energy-driven inflation.”
The report said that at 06:06 GMT, “the rand traded at 16.45 against the dollar, roughly up 2.2% from Tuesday’s close and around its strongest level in almost a month.”
It added that the ceasefire announcement helped calm weeks of market volatility, sending oil prices lower and supporting currencies of net-energy-importing countries like South Africa.
It further noted that the rand had previously fallen nearly 6% last month amid geopolitical uncertainty, while investors now await key US inflation data and Federal Reserve signals later in the week.
