Rand Slips as Dollar Strengthens, Oil Prices Rise
By Aboki Forex —
JOHANNESBURG, May 15 (Reuters) – The South African rand weakened in early trade on Friday, falling about 1% against the dollar as a stronger greenback and rising oil prices dampened risk sentiment.
At 0654 GMT, the rand traded at 16.6426 per dollar, down from its previous close of 16.45. The dollar was firmer against a basket of currencies and on track for its biggest weekly gain in more than two months.
Global oil prices climbed more than 1% after U.S. President Donald Trump said China wanted to buy American oil. Concerns also persisted over ship attacks and seizures in the Strait of Hormuz, despite Iran saying about 30 vessels had passed through the waterway.
“The risk-sensitive rand has weakened sharply this morning in line with the weaker emerging market and commodity currencies,” said Andre Cilliers, currency strategist at TreasuryONE. He added that rate hike and inflation fears were weighing on risk sentiment.
The rand often takes cues from global drivers. It has been at the mercy of market sentiment since the start of the U.S.-Israeli war with Iran at the end of February.
“The rand closed at 16.45 yesterday, but even since the announcement of U.S. data, it has been riding on the back of commodity prices, especially platinum. These all came off last night, quite quickly, coupled with the oil price moving up,” Adam Phillips, treasury specialist at Umkhulu Treasury, wrote in a note.
South Africa’s benchmark 2035 government bond was weaker in early deals. The yield rose 1 basis point to 8.765%.