The local currency has again lost ground.
Image: ChatGPT
The rand opened the week on a firmer footing, but remains vulnerable to global developments, particularly oil prices and Federal Reserve decisions on interest rates in the US.
The local currency was trading at around R16.59 to the dollar on Monday morning before climbing to R16.68 in late afternoon trade, due to recent volatility driven by geopolitical tensions in the Middle East.
Often a liquid proxy for overall emerging market sentiment, the rand falls sharply during global risk-off periods and is among one of the worst-performing emerging market currencies in early 2026.
According to Bianca Botes, MD at Citadel Global, markets stabilised somewhat after the weekend engagement between the US and Iran. “US and Iran engagement over the weekend settled markets, with Iran indicating that it is reviewing the US response to its 14-point proposal,” she said.
Over the weekend, conflicting reports emerged of an incident involving a US warship in the Strait of Hormuz, although Washington denied any strike. At the same time, diplomatic efforts continued, with Iran reviewing a US response to its proposed framework to end the conflict.
Global markets reflected the improved sentiment, with Asian equities gaining in early trade and US futures pointing to a positive start to the week.
However, the broader picture remains uncertain.
Andre Cilliers, currency strategist at TreasuryONE, said earlier this morning that the start to the week had been subdued, with the rand trading in a narrow range. “The rand is trading firmer at R16.62, keeping to a fairly narrow trading range. The local currency remains susceptible to events in the Middle East,” he said.
Oil prices, a key driver of the rand, were relatively stable, with Brent crude trading around $108 a barrel. Gold, another important market indicator, was slightly lower at about $4,611 an ounce, said Cilliers.
Investec chief economist Annabel Bishop said recent commentary from the US Fed suggested a shift away from a clearly dovish stance. Higher US interest rates typically weigh on emerging market currencies such as the rand, as investors shift funds into safer dollar-denominated assets, she noted.
The Fed left rates unchanged last week due to worries about inflationary pressures on household bills and fuel. Bishop said the rand had weakened to around R16.90 following the Federal Open Market Committee meeting, before recovering to around R16.60.
The dollar has risen since the war in the Middle East began at the end of February, on safe haven flows and this has directly contributed to rand weakness against the greenback of 4.9% so far, while the dollar is stronger by 4.3%, said Bishop.
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