Iran War Enters Week 6 as Markets Swing on Ceasefire Hopes, Oil and Rand Volatility

The conflict involving Iran has entered its sixth week, with markets increasingly focused on the economic consequences rather than only the military developments. According to TreasuryONE’s currency strategist Andre Cilliers and Head of Market Risk, Wichard Cilliers, uncertainty remains high, as reports suggest the United States is pressing for a deal while Iran continues to reject a ceasefire in favour of a full end to the war. Although mediators have indicated that discussions may be progressing, no agreement has yet been confirmed.

TreasuryONE noted that the longer the conflict continues, the more severe the global economic impact becomes. The Strait of Hormuz remains only partially operational, with vessel traffic still well below normal levels, and the disruption is feeding into elevated fuel and transport costs across the world. This, in turn, is placing pressure on consumer spending and broader economic growth, with higher energy prices filtering into food and other essential goods.

US economic data continues to come through, but it is taking a back seat to war-related headlines. Non-farm payrolls were slightly better than expected at 178,000 versus forecasts of 150,000, with unemployment holding at 4.3%. Even so, markets are increasingly focused on the inflationary effect of higher oil prices, with expectations shifting from interest rate cuts toward the possibility of rate hikes if the conflict persists and energy costs remain elevated.

For South Africa, the rand remains highly headline-driven. TreasuryONE said the currency is currently oscillating between optimism around a possible deal and renewed concern over escalation, leaving it in a broad R16.75 to R17.25 range for now. A confirmed agreement could strengthen the rand toward the lower end of that range, while a worsening conflict could see the currency come under renewed pressure toward R17.50.