Finance

Big win for the rand

Staff Writer

 ·15 Jun 2026

The rand has pushed to its strongest level since March, gaining on news that the United States and Iran have reached a deal to end the war in the region.

US President Donald Trump announced this weekend that the US and Iran had reached an agreement for the “immediate and permanent” end to all military operations in the Middle East.

This would include the “toll-free opening” of the Strait of Hormuz and the immediate removal of the United States’ naval blockade.

If the agreement is signed and followed through without disruption, this would bring the state of the Strait to the same point as before the US and Israel launched attacks against Iran at the end of February.

Ships were moving freely through the Strait before the 28 February attacks, which led to Iran shutting it down. The shutdown led to a global oil crisis as energy prices surged.

According to Investec Chief Economist Annabel Bishop, the announcement of the peace deal has pushed the market to recalibrate, which has boosted the rand and significantly lowered oil prices.

However, she stressed that the recalibrations are happening with “some caution”.

This is because previous announcements of peace deals and ceasefires have fallen flat, and the latest is yet to be signed.

“A final agreement has not been reached yet, with further talks planned over the next two months,” she said.

For South Africa, the rand has gained significantly as some of the global risk premiums have eased, pushing the local unit to around R16.15/$ on Monday.

The domestic currency has dipped back below R19.00/EUR and R22.00/GBP as risk-off has reduced in financial markets, Bishop said.

“The rand is tracking stronger in general, rising in the Bloomberg EM currency ranker, as market risk appetite increases.”

For Brent crude, futures currently price the oil at $78.9 a barrel by January next year. Oil is currently trading at $83 a barrel, down significantly from the highs of over $110 a barrel at the onset of the war.

Pre-war levels still far off

However, it should be noted that market conditions are still worse than before the United States’ attack—and thing can still change.

Even at $79 a barrel, oil futures are much higher than the $65 a barrel level before the war in the Middle East began.

The rand was below R16.00/$ around the same time.

Bishop believes the rand is likely to see further strength as other financial market indicators for South Africa improve, including the prospect of eased inflation pressures.

But even then, the impact will not be as immediate as at the onset of the war.

“Supply chain pressures [because of the war] will need to unwind, as well as price pressures—which will mean there will not be an immediate drop in inflation”, she said.

“It will take at least a couple of months to show a turn towards disinflation.”

Further, this is all contingent on the peace deal actually being confirmed and followed through. “It remains to be seen if the Middle East peace deal and lower oil prices hold,” Bishop said.

Should the deal carry through, however, consumers stand to win.

“Fuel price cuts originally signalled for July in South Africa are now likely to be substantially larger,” Bishop said, if the lower oil prices persist.

Mid-month data from the Central Energy Fund (CEF) shows over-recoveries for both petrol (circa R2.60 per litre) and diesel (R4.20 per litre).

Even with the second half of the fuel levy relief being added back into prices, motorists are on track for a cut at the pumps in July, which should help contain inflation.

However, even with the expected cuts, fuel prices remain far higher than before the war.

Petrol prices have risen by R7.96 cumulatively between March and June, with diesel currently R10.81 per litre higher.

Even with the expected cuts for July, prices would still be R6.89 and R8.20 per litre higher, respectively.

Fuel price changes pre-war to July