The South African rand strengthened to 16.70 per US dollar, recovering from an over three-month low of 16.98 reached last week, as easing tensions between the US and Iran triggered a sharp drop in oil prices and improved global risk appetite. Brent crude fell from two-month highs after Washington and Tehran paused hostilities following two weeks of strikes, raising hopes for a diplomatic resolution that could de-escalate the conflict and allow shipping through the Strait of Hormuz to resume. Last week, the rand weakened 2% against the dollar after the South African Reserve Bank unexpectedly kept its benchmark interest rate unchanged, against market expectations for a 25-basis-point hike. Meanwhile, South Africa's annual inflation accelerated to 5.0% in June, the highest in two years, while core inflation climbed to 4.1%, its strongest level since September 2024. Both measures remain above the upper end of the SARB's 3% ±1 percentage point target range.