Crisis, chaos and the surprising resilience of the Rand

Airstrikes and alliances: The Middle East ignites

What a month it has been. At first glance, June appeared destined to be unremarkable –another stretch of modest volatility and routine market narratives. By mid-month, it seemed we would be scraping the barrel for any material worth including in this Rand Report. But beneath the surface, history was already in motion. We were, it turned out, on the brink of what many feared could ignite a Third World War.

It began on 13 June, when Israel launched a sudden and sweeping offensive against Iran. The targets were no ordinary military assets: the Israeli campaign zeroed in on senior commanders, nuclear scientists, and key nuclear infrastructure. The precision and audacity of the strikes read more like the climax of a Hollywood thriller than the morning headlines.

Remarkably, global markets absorbed the news with relative composure. After all, these two nations have traded missiles before. Institutional investors, hardened by decades of Middle Eastern tensions, were not quick to panic. But then came the wildcard: Trump.

It is no secret that Donald Trump and Israeli Prime Minister Benjamin Netanyahu – “Bibi,” as he is widely known – enjoy a relationship defined by mutual admiration and strategic alignment. Within hours, Trump revived the familiar refrain that Iran was merely “two weeks” away from a weapons-grade nuclear device. For context, this same warning has echoed out of Jerusalem for over 30 years without materialising into the apocalyptic event it predicts – but I digress.

Markets reel and recover

The rhetoric escalated to action on 22 June, when the US formally entered the conflict. B-2 bombers carrying specialised “bunker buster” ordnance capable of penetrating 60 metres of reinforced concrete struck Iran’s three principal nuclear research facilities. And in a twist of almost theatrical irony, Trump then took to the podium to call for peace and demand a ceasefire.

Markets initially recoiled. The Monday following the American intervention, equities opened sharply lower across the board. Yet the response proved fleeting. It appears that major global players correctly anticipated this would not devolve into a broader regional conflagration. Oil prices, which had spiked in the immediate aftermath, collapsed 16% the next day. Emerging-market currencies, notably the South African Rand, staged a spectacular recovery.

Trump’s calls for de-escalation were, to the surprise of many, heeded. Within days, Israel and Iran declared a ceasefire.

One might assume that this near-crisis would have exhausted the Rand’s capacity for surprise – particularly after it surged to its strongest level in eight months, touching 17.57 against the US Dollar. One would be wrong.

Enter South African politics.

Domestic drama: Politics eclipse data

Following the Rand’s tremendous recovery, the calm proved predictably short-lived. On Thursday, 26 June, President Cyril Ramaphosa abruptly dismissed DA Deputy Minister of Trade, Industry and Competition, Andrew Whitfield. No official explanation accompanied the firing, and markets immediately took notice. Within two hours, the Rand had surrendered nearly 1% of its gains as investors braced for what could become a broader political rupture.

The Democratic Alliance wasted no time in issuing a sharply worded ultimatum to Ramaphosa, fuelling speculation that the Government of National Unity might be careening toward a full-blown crisis. Would the ANC exploit the moment to orchestrate a sweeping cabinet reshuffle? No one could say with confidence – and in that vacuum of uncertainty, traders responded in the only way they know how: by selling the Rand at a breakneck pace.

By Friday, the urgency to restore confidence had become undeniable. The Presidency released an official statement explaining that Whitfield’s removal stemmed from his unauthorised travel to the US – an infraction presented as both procedural and substantive. To defuse tensions, the statement invited the DA to nominate a replacement candidate.

This disclosure, while hardly an unqualified reassurance, nonetheless calmed the worst fears. The market took it as evidence that Ramaphosa was not engaged in some hidden purge of coalition partners. The Rand promptly retraced its losses, strengthening by 1.2% against the major currencies. The Government of National Unity remains on uncertain footing, but at least, for the moment, there was a sense that there is method – however improvised, to the apparent madness.

Over the weekend, the Democratic Alliance escalated tensions further by announcing its withdrawal from the National Dialogue. In addition, the party declared it would oppose any departmental budget votes linked to portfolios overseen by officials implicated in corruption. While this rhetoric did not carry quite the same existential threat as the earlier crisis – when the DA openly contemplated exiting the Government of National Unity altogether – it nonetheless underscored a deeper fragility. For South Africa, it was another reminder that, in the eyes of global investors, domestic politics continue to overshadow economic fundamentals. In a market where sentiment is as decisive as data, such instability is seldom priced in gracefully.

In the numbers

The USD/ZAR opened the month at 17.93 and closed stronger at 17.67, while the GBP/ZAR edged higher from 24.21 to 24.35, and the EUR/ZAR rose from 20.44 to finish at 20.91.

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