Rand firms to R16,24 as oil eases and fuel price hike of up to R3 a litre looms
Brent is still above $100 a barrel, and current data points to petrol rising by as much as R2,78 and diesel by R3,00.
The rand is trading at R16,24 to the US dollar, R18,63 to the euro and R21,73 to the British pound, firming across the board as oil prices eased off last week’s four-month highs.
As IOL reported on Monday, the local currency’s strength is being supported by the retreat in crude and steadier global risk appetite. Bianca Botes, managing director at Citadel Global, attributed the rand’s firmer tone to those two forces.
The relief at the pump is not here yet. Data currently points to fuel price increases of up to R2,78 a litre for petrol and R3,00 a litre for diesel.
Brent North Sea crude was down 2,0 percent at $101,78 a barrel around 10am South African time, with West Texas Intermediate down 2,0 percent at $98,34. Both contracts remain around $100, well above pre-war levels.
The decline followed hopes that Saudi Arabia could restore about half of its crude shipments within days, after disruption to its East-West pipeline to the Red Sea.
Why the oil price still matters to a bond or a bond repayment
Elevated energy costs keep pressure on central banks, which are trying to contain inflation without tipping their economies over. The US Federal Reserve raised interest rates on Wednesday, and the Bank of Japan lifted its policy rate on Friday to a three-decade high of 1,25 percent, a 25-basis-point increase that passed by a seven-to-two majority.
The yen weakened against the dollar despite that hike, on expectations that further increases may come more slowly than markets had hoped.
For South African households, the transmission runs through fuel, food and transport costs, and then through the Reserve Bank’s own decisions on the repo rate. The Reserve Bank’s next scheduled policy meeting is where that pressure gets weighed.
What moved in Asia
Global demand for artificial intelligence technology and signals from US-China trade talks supported Asian equities. US and Chinese economic officials met on Sunday ahead of a summit on Thursday in Washington between US President Donald Trump and Chinese President Xi Jinping.
US Treasury Secretary Scott Bessent said the two countries had discussed setting up a channel to communicate on AI issues, to be called the US-China AI dialogue. Chinese state media described the talks as candid, in-depth and constructive.
Hong Kong’s Hang Seng closed 1,2 percent higher at 25,042.71. Shanghai’s Composite rose 1,0 percent to 3,949.91. South Korea’s tech-heavy benchmark gained 1,7 percent. Tokyo was closed for a public holiday and Sydney finished flat. In London, the FTSE 100 was up 0,4 percent at 10,705.08.
The war between the United States and Iran remains the oil market’s central concern. Thomas Mathews of Capital Economics wrote that at the Trump-Xi talks, the area with the most potential to move markets is probably any Chinese cooperation on Iran, given recent oil and bond market volatility, but added that China’s apparent unwillingness to help so far means investors probably should not hold out too much hope.
Source: IOL, Monday markets: Oil prices ease, rand strengthens, stocks higher as sentiment improves.
