War Talk and the Rand

According to Bianca Botes, treasury partner at Peregrine Treasury Solutions, the first full trading week of the new year will likely be a bumpy one after the killing of a top Iranian general at the end of last week in a US airstrike.

The rand is expected to come under pressure and Brexit and the US-China trade war will continue to be major market influencers as we start 2020.

After the assassination of Soleimani, a powerful Iranian general, the US and Iran fallout escalated, which saw oil going above $70 a barrel according to a Bloomberg report. 

On Monday, following a warning by the US State Department of an increased risk of missile attacks near energy facilities and military bases in Saudi Arabia, Brent Futures jumped by another 3%.

Threats of retaliation were repeated by Donald Trump if Iran were to do anything. He also vowed to place heavy sanctions against Iraq if they forced American troops to leave OPEC’s second largest producer, which resulted in a further price boost. 

Furthermore, Trump said that if Tehran reacts due to Soleimani’s killing then he is prepared to attack more than 50 sites and strike disproportionately. The Middle East nation has a score to settle with the US and would no longer adhere to limits on its enrichment of uranium. According to Bloomberg, the fallout has further deepened as Iraq’s parliament took a vote to expel US troops. 

The Iranian leadership has indicated that they will be mobilising its militia network across the region and they will most likely target US military installations and bases in the Middle East and Trump will be sending more troops to the Middle East. 

On top of these tensions that are affecting the rand, Eskom is still constrained, which led them to conducting power cuts over the weekend. 

Article Source: https://businesstech.co.za/news/business/364168/rand-weakens-on-war-talk/