Oil prices surged above $100 a barrel ahead of a US shipping blockade on Iranian ports after weekend peace talks between the US and Iran collapsed, threatening to pile pressure on several African currencies that have depreciated as a result of the crisis.
South Africa’s rand weakened and was nearly 1% down from its close on Friday after the weekend setback further jeopardized an already fragile two-week ceasefire.
“Unlike with previous shocks, the degree to which African countries can absorb these pressures varies widely,” two Signal Risk analysts noted in a piece published by the Institute for Security Studies on Monday.
Central banks in Angola, Morocco, Mozambique, and South Africa have suspended policy rate reductions, citing imported inflation risks, the experts noted, with other countries likely to follow suit.
Meanwhile, Kenya and Nigeria — the latter of which is Africa’s largest crude exporter and has benefited from rising oil prices — are in a more “favourable position” due to factors such as improved reserve management, they added.
