Daily Market Report – 13 June 2025

 “Storm Over the Markets: The Day ZAR Buckled Under Fire”

In the early hours of a tense Friday morning, global markets awoke to the sound of a geopolitical thunderclap. Operation Rising Lion—a bold, unilateral military offensive launched by Israel against Iran—sliced through the quiet anticipation that had gripped investors all week. Warplanes, drones, and intelligence operatives converged on Iranian soil, striking key nuclear and military installations. The world stood still as news filtered in: Iran’s Revolutionary Guard General Hossein Salami was dead, the Natanz nuclear site lay in ruins, and Israel’s Prime Minister Netanyahu declared a state of emergency.

As sirens blared in the Middle East, another storm gathered thousands of kilometres away—on the southern tip of Africa, where the South African rand began to reel.

For weeks, the ZAR had been a phoenix, rising steadily from the ashes of domestic dysfunction, bolstered by booming gold and platinum prices, a tentative truce in local politics, and the comforting hum of investor optimism. But now, the USD-ZAR pair surged to 17.9250, with eyes already set on the 18.1900 level—a far cry from the sub-17.70 lows that once promised a new age of currency stability.

 The Engines That Stalled

Earlier that week, there had been murmurs of concern. April’s mining production figures were grim—a 7.7% year-on-year contraction, the sixth in a row. Despite the glitter of global gold prices, South Africa’s miners stood idle, beset by collapsing infrastructure, Transnet’s logistical tangle, and rising regulatory burdens. A recession had quietly settled over one of the country’s most vital sectors.

Even President Ramaphosa’s “National Dialogue”, meant to inspire unity and drive toward Vision 2030, failed to lift spirits. Critics scoffed: “We don’t need more talking shops. We need a plan.” And in the distance, an old, rusty idea re-emerged—the state-owned shipping company, threatening to weigh down the public purse even further.

 Oil’s Revenge and the Bond Market Blues

Then came the oil. Black gold surged past $78.50 a barrel, fueled by fears that Iran would retaliate, dragging the US and its allies deeper into the fray. For South Africa, this was a cruel twist of fate. Gold’s ascent had once shielded the economy from imported inflation, but now, oil threatened to devour those gains.

The bond market, already on edge, blinked. Yields, which had been falling for weeks, paused their descent. Today’s inflation-linked bond auction, which would feature I2031, I2033, and I2058 maturities, suddenly became a litmus test: would investors still bet on disinflation and SARB rate cuts? Or would they run for cover?

The FRA market held its breath. Expectations for rate cuts stayed muted. The 6X9 FRA clung to a modest 34bp above 3m JIBAR—doubtful, hesitant, like a soldier peeking over a trench.

 The ZAR Fights to Catch Its Breath

Despite the chaos, some hope remained. The ZAR’s fall wasn’t entirely irrational—it was a correction long in the making. The currency had run too far, too fast. What traders now witnessed was not a collapse, but a recalibration. A reckoning. A reminder that even the strongest narratives can be disrupted by the unexpected.

And yet, the bigger story had not changed. The USD, bloated by years of deficits, rising tariffs, and political gridlock, still faced a long decline. This geopolitical tempest might elevate it briefly, but the fundamentals were stacked against its reign.

When the storm calms, the ZAR may well reclaim its lost ground—especially if the National Treasury sticks to its script, if the SARB holds its nerve, and if the global hunt for yield returns to EM shores.

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