Rising oil prices weaken South Africa’s rand

Oil prices surged above $100 a barrel ahead of the U.S. maritime blockade on Iranian ports after weekend peace talks between the United States and Iran collapsed, threatening to put pressure on several African currencies that have depreciated due to the crisis.

The South African rand weakened and was down almost 1% from its Friday close after the weekend setback further undermined an already fragile two-week ceasefire.

“Unlike previous shocks, the extent to which African countries can absorb these pressures varies considerably,” two Signal Risk analysts noted in an article published Monday by the Institute for Security Studies.

Central banks in Angola, Morocco, Mozambique and South Africa have suspended policy rate cuts, citing imported inflation risks, experts noted, and other countries are likely to follow suit.

Meanwhile, Kenya and Nigeria – the latter being Africa’s largest crude exporter and having benefited from rising oil prices – are in a “more favorable position” due to factors such as better reserve management, they added.

-Preeti Jha