{"id":866864,"date":"2026-07-20T15:48:37","date_gmt":"2026-07-20T13:48:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=866864"},"modified":"2026-07-20T15:48:41","modified_gmt":"2026-07-20T13:48:41","slug":"big-win-for-the-rand","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/866864\/big-win-for-the-rand\/","title":{"rendered":"Big win for the rand"},"content":{"rendered":"\n

While the rand has weakened since the resurgence of fighting between the United States and Iran, positive domestic moves and global sentiment toward South Africa are keeping the unit in check.<\/p>\n\n\n\n

According to Investec Chief Economist Annabel Bishop, the rand followed global markets last week, suffering amid the escalation of conflict in the Middle East.<\/p>\n\n\n\n

The unit, which had been trading stronger around R16.25 after the US and Iran agreed to a ceasefire, quickly buckled, along with other emerging market currencies, as global markets went risk-off when the agreement was broken.<\/p>\n\n\n\n

This led to the rand weakening to around R16.58\/$ last week, as oil prices climbed towards $90 a barrel amid the closure of the Strait of Hormuz again.<\/p>\n\n\n\n

Iran has vowed \u201cnot a single drop\u201d of oil or gas will pass through the Strait as the United States increases its attacks against the country.<\/p>\n\n\n\n

The US has expanded its attacks, moving in on energy plants, while Iran strikes US military assets in neighbouring Middle Eastern countries.<\/p>\n\n\n\n

Bishop noted that peace talks are reportedly ongoing despite the breach of the cease-fire, which has kept oil prices from surging to previous wartime levels.<\/p>\n\n\n\n

When the US first attacked Iran at the end of February 2026, oil prices shot up as high as $120 a barrel and lingered above $100 a barrel for the months that followed.<\/p>\n\n\n\n

However, this time around, markets are more confident, or at least more hopeful, that the countries will move towards a permanent ceasefire and re-opening of the Strait.<\/p>\n\n\n\n

“The resumption of the Middle East war has seen a mild negative impact on global financial market risk appetite, which is subdued but still in positive territory in July, according to the S&P Global Investment Manager Index (IMI),” Bishop said.<\/p>\n\n\n\n

“However, the survey began before the escalation in conflict in the Middle East, and only part of the survey ran through the break in the ceasefire. As a result, the results are likely to be slightly more positive than the second half of July would reflect,” she added.<\/p>\n\n\n\n

More notably, the rand has been relatively stable in light of the return to war in the Middle East.<\/p>\n\n\n\n

This was largely due to “improving fundamentals domestically, particularly for government finances,” Bishop noted, which has been reflected in credit rating improvements.<\/p>\n\n\n\n

In addition, “foreign investor sentiment is positive towards South Africa,” she said.<\/p>\n\n\n\n

This has been shown with net purchases of South African government bonds in July to date\u2014double that of June\u2019s net purchases.<\/p>\n\n\n\n

The sentiment is being driven by the Government of National Unity making inroads into tackling structural problems, including municipal finances, the economist said.<\/p>\n\n\n\n

Municipalities getting paid<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The National Treasury announced last week that it had taken the step of temporarily withholding the July 2026 equitable share transfers to sixty-nine municipalities. <\/p>\n\n\n\n

More than half of municipalities are in financial distress.<\/p>\n\n\n\n

However, in an update, the National Treasury announced that 42 of the municipalities have already complied with the requirements and had their transfers reinstated<\/p>\n\n\n\n

Treasury said that the withholding of the share is a short-term corrective measure, and that it is a lever used to instil fiscal discipline and protect public money.<\/p>\n\n\n\n

It said that it is typically in effect for no longer than 30 days, although the Finance Minister may withhold the transfers for up to 120 days.<\/p>\n\n\n\n

Bishop said that resolving financial problems in local government is key to strengthening the sustainability of South Africa\u2019s government finances.<\/p>\n\n\n\n

It is also key for credit rating agencies\u2019 assessments of the creditworthiness of South Africa’s debt and so risk premiums, she added.<\/p>\n\n\n\n

If South Africa can get a grip on this aspect of its financial management, investor confidence will grow, which would be reflected in a stronger rand.<\/p>\n\n\n\n

Aside from broader economic moves, markets are also keeping tabs on the South African Reserve Bank’s (SARB) interest rate decision later this week.<\/p>\n\n\n\n

Current expectations are split between the SARB holding rates or hiking rates by 25 basis points, with the scales tipped towards a hike.<\/p>\n","protected":false},"excerpt":{"rendered":"

Despite weakening on the resurgence of war in the Middle East, the rand is again proving to be resilient and beating the odds.<\/p>\n","protected":false},"author":10,"featured_media":817333,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2079201923110948877","_sma_x_attempts":1,"footnotes":""},"categories":[11121],"tags":[19853,3670],"class_list":["post-866864","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-annabel-bishop","tag-rand"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866864","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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=866864"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866864\/revisions"}],"predecessor-version":[{"id":866865,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/866864\/revisions\/866865"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/817333"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=866864"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=866864"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=866864"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}