South Africa’s 10-year government bond yield fell further to below 8.70%, reaching the lowest in a week, as the rand’s recent strength helped offset some of the inflation risks from higher oil prices. The stronger currency reduces imported inflation risks and boosts the appeal of the country’s relatively high-yielding bonds to foreign investors. The appeal of local debt has also been supported by the central bank's credibility, an improving fiscal outlook and efforts to boost structural reforms. However, elevated tensions in the Middle East have kept global oil prices high, raising concerns about renewed inflationary pressure. Domestically, recent fuel-price adjustments have also increased costs for households and businesses, adding to inflation risks. Against this backdrop, the South African Reserve Bank may be compelled to tighten policy this month after holding rates in April and July. Economists are increasingly anticipating a 25 bps rate hike on September 23.