{"id":858772,"date":"2026-04-29T16:39:47","date_gmt":"2026-04-29T14:39:47","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=858772"},"modified":"2026-04-29T16:39:51","modified_gmt":"2026-04-29T14:39:51","slug":"rand-takes-a-beating-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/858772\/rand-takes-a-beating-2\/","title":{"rendered":"Rand takes a beating"},"content":{"rendered":"\n

The South African rand took a knock on Wednesday (29 April) ahead of the US Federal Reserve’s announcement on US interest rates.<\/p>\n\n\n\n

By 16h30, the rand was trading over 1.3% weaker against the dollar at R16.74.<\/p>\n\n\n\n

Analysts noted that the unit was lower as investors awaited the Fed’s interest rate decision scheduled for the evening, local time.<\/p>\n\n\n\n

The decision comes against a backdrop of an Iran war that shows little sign of imminent resolution.<\/p>\n\n\n\n

The US dollar strengthened against the basket of currencies amid expectations that the Fed would hold interest rates steady.<\/p>\n\n\n\n

There are growing concerns that elevated energy costs from the Iran War could morph from a one-off shock into broader underlying inflation.<\/p>\n\n\n\n

Diplomatic efforts to end the Iran conflict have stalled, with US President Donald Trump rejecting Tehran’s latest proposal.<\/p>\n\n\n\n

The United States said that Iran had told Washington it was in a “state of collapse” while working out its leadership.<\/p>\n\n\n\n

The nearly two-month war in the Middle East has led to soaring fuel prices, eroding consumer confidence to a record low and wiping out market pricing for rate cuts.<\/p>\n\n\n\n

Nedbank economists said in a research note that markets broadly expect policy rates to be held steady, reflecting a continued “wait-and-see” approach amid elevated geopolitical uncertainty and mixed inflation dynamics.<\/p>\n\n\n\n

“The Fed is expected to keep the Fed funds target rate unchanged at 3.75%, as disinflation progress remains uneven and activity data continues to surprise modestly to the upside,” the bank’s economists said.<\/p>\n\n\n\n

For South Africa, the Reserve Bank opted to hold rates at its March meeting\u2014which followed the onset of the war on 28 February\u2014with warnings that rate hikes could follow.<\/p>\n\n\n\n

This is a sharp turn from expectations before the war, where economists had anticipated at least two more interest rate cuts this year.<\/p>\n\n\n\n

Now, the best-case scenario is that interest rates will see a cut at the end of the year if the war ends quickly.<\/p>\n\n\n\n

However, the base case is for a long hold, with the downside view\u2014a much longer war\u2014being two interest rate hikes ahead.<\/p>\n\n\n\n

Inflation pressure will determine the way forward<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The key factor being examined is how the war and rising fuel costs will affect inflation.<\/p>\n\n\n\n

With oil prices again shooting past $110 a barrel, there are concerns that inflationary pressures will persist, pushing CPI and inflation expectations out of synch with the SARB’s 3% target.<\/p>\n\n\n\n

Fuel prices shot up in April 2026 by R3 per litre for petrol and R7 per litre for diesel. Prices for May are also building for another R2\/l and R5\/l increase.<\/p>\n\n\n\n

Fuel consumers will be spared the reintroduction of the government’s fuel levy until June, when the R3.00\/l cut to taxes will be added back to the price in parts.<\/p>\n\n\n\n

However, the outlook for fuel prices remains dim, and the inflationary impact is expected to feed through the entire supply chain, across industries.<\/p>\n\n\n\n

Higher fuel prices will translate into higher transport expenses more broadly, which act as input costs for production, leading to higher food prices, among other second-round effects.<\/p>\n\n\n\n

Because of rising energy costs, inflation is expected to spike to around 4% in April. While this is still within the SARB’s tolerance band, higher energy prices for longer risk pushing inflation higher.<\/p>\n\n\n\n

Reserve Bank Governor Lesetja Kganyago has noted that the bank’s Monetary Policy Committee won’t hesitate to respond to this by hiking interest rates.<\/p>\n","protected":false},"excerpt":{"rendered":"

The South African rand took a knock on Wednesday (29 April) ahead of the US Federal Reserve’s announcement on US interest rates.<\/p>\n","protected":false},"author":130,"featured_media":853320,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[1799,3670,3619],"class_list":["post-858772","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-nedbank","tag-rand","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/858772","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/130"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=858772"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/858772\/revisions"}],"predecessor-version":[{"id":858777,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/858772\/revisions\/858777"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/853320"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=858772"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=858772"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=858772"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}