Monday 11 January 2016

Iran stands a lot to lose over tensions with Saudi

With much of the talk last week dominated by China not a lot of attention was drawn to the increasing tensions between Iran and Saudi Arabia that had seemingly developed after the latter had executed a prominent Shiite cleric causing the Saudi's Embassy in Tehran to be torched in protest.

The condemnation received by Iran after a breakdown in diplomatic ties with its Middle Eastern neighbour was too such an extent its own trading partners for which it has become reliant on for foreign reserves after the onset of sanctions from the West indicated that it may not be winning over many nations sympathy.

Considering that oil prices look set for another dismal year ahead, it doesn't look likely that the oil rich nation will contribute any positive development to the desperate situation oil markets find themselves in with a prolonged suppression by major production players, one of which happens to be Saudi Arabia who has led OPEC into producing copious amounts of unneeded oil.

With the removal of sanctions from the world looking set to be dropped sometime soon, it's not quite the optimal place Tehran would want to start things off once again. It also makes the ground with which both parties, the US and Iran, were able to reached an agreement to the upliftment of such sanctions in exchange for inspection of nuclear facilities more likely to be done on shaky ground with those in the decision making process perhaps having second thoughts over whether it should be granted if Iran's behaviour leaves a lot to be desired.
 

The South African Rand takes another beating this time from Japanese retail traders

Africa's second largest economy is facing the possibility of a currency crisis that could have a devastating impact on economic activity after months of being sold down with this morning's sudden drop during a thinly traded time of day taking the beleaguered emerging market currency to fresh all time highs against major currencies such as the dollar, pound and yen.

It would seem that expectations in the market is the need for a pullback should materialise however with retail traders continuing to bet for a stronger Rand in the months ahead serving as a means to fan the flames further as stops get taken out by the load as the currency weakens with no mercy.

Earlier in December South African president Jacob Zuma shocked financial markets by firing finance minister Nhlanhla Nene and replacing him with an unknown back bencher sending the Rand plummeting. The moves seems to have set debate alive within the ruling party, the ANC, whether they could be faced with a ticking time bomb should they allow Zuma to continue his economical buffoonery.

The political situation serves the appetite of sentiment as the nation falls within the confounds of an emerging market economy, a sector of the world's economies currently facing huge fears and uncertainty after the slump in China's lack of sufficient demand.  
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