Rand Volatility Surges as Oil Prices and Iran-US Tensions Shake Markets

The rand experienced two of its largest daily movements of 2026 last week as escalating tensions between the United States and Iran, rising oil prices and uncertainty around interest rates triggered sharp volatility across global markets.

Locally, investors had expected the South African Reserve Bank’s Monetary Policy Committee to increase interest rates by 25 basis points. The decision to leave rates unchanged surprised the market and reduced some of the rand’s appeal as a carry-trade currency. The currency subsequently weakened to around R16.96 against the US dollar.

The pressure intensified when oil moved above $100 a barrel following attacks on shipping and continued military action in the Middle East. The increase renewed concerns about global energy costs, inflation and the possibility that the US Federal Reserve may need to keep interest rates higher for longer or consider further increases.

Market conditions improved after the United States and Iran indicated that communication between the two countries was continuing, with Oman reportedly assisting discussions. Oil subsequently moved back towards $90 a barrel and the rand recovered. TreasuryONE expects the rand to trade largely within the R16.25 to R16.75 range while talks continue, although renewed conflict or disruptions to oil supplies could push the currency back towards R17.