South African Rand Weakens as Dollar and Oil Prices Rise
The South African rand weakened to 16.70 per US dollar on Wednesday, its lowest level since late July, pressured by a stronger dollar and higher oil prices that weighed on risk-sensitive assets. The dollar remained supported by expectations of at least one more Fed rate hike this year, followed by further tightening in 2027. Meanwhile, Brent crude held above $100 a barrel amid continued Middle East supply risks and a strong hurricane forecast for US oil-producing regions. In South Africa, the central bank said that the risk of second-round inflation effects had become more pronounced as oil prices remained elevated for longer and El Niño clouded the outlook. The rand has also faced pressure from high petroleum imports, which have sustained dollar demand and increased the currency’s sensitivity to oil prices. South African policymakers raised interest rates by 25 basis points to 7.25% in September, with markets now pricing in two further increases over the next six months.
70 per US dollar on Wednesday, its lowest level since late July, pressured by a stronger dollar and higher oil prices that weighed on risk-sensitive assets. The dollar remained supported by expectations of at least one more Fed rate hike this year, followed by further tightening in 2027. Meanwhile, Brent crude held above $100 a barrel amid continued Middle East supply risks and a strong hurricane forecast for US oil-producing regions. In South Africa, the central bank said that the risk of second-round inflation effects had become more pronounced as oil prices remained elevated for longer and El Niño clouded the outlook.
The rand has also faced pressure from high petroleum imports, which have sustained dollar demand and increased the currency’s sensitivity to oil prices. 25% in September, with markets now pricing in two further increases over the next six months.