Viewpoint: ZAR impressively resilient given the war

One would be forgiven for thinking that the war in Iran and the complex consequences it could drive would be tearing financial markets apart.

After all, oil is such an important input into so many aspects of life that it holds the potential to be massively disruptive. And yet, so far, financial market movements have remained fairly well-contained.

An assessment of currency volatility across both developed and emerging markets, conducted by the Institute for International Monetary Affairs (IIMA), shows that while FX volatility has risen due to the war, the spike, especially in EM currencies, has been well contained.

The media coverage seems at odds with developments in financial markets, which have taken much of the spike in energy prices in their stride. It means that either investors are overly optimistic that this will blow over soon, or it suggests it is less of a crisis than first thought.

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