The South African (SA) Rand held steady in early Thursday trade as investors assessed the United States (US) Federal Reserve’s hawkish stance, which dampened expectations for ‌near-term interest rate cuts, while conflict in the Middle East kept risk sentiment fragile.

The Rand traded at 17.01 against the Dollar, little changed from its previous close of 16.9975.

The Federal struck a hawkish tone ⁠on Wednesday as surging energy prices arising from the Iran conflict clouded the inflation outlook.

The Central bank held rates steady but warned of risks that rising energy costs could fan a more persistent inflation spike.

Like other risk-sensitive currencies, the rand often takes cues from global drivers, in addition to domestic economic data.

“The Rand lost around 1.8% yesterday on the ‌back ⁠of the stronger Dollar and rising energy cost concerns. The local currency closed at R16.98 and is trading unchanged against the Dollar this morning,” said Wichard Cilliers, Head of Market Risk at ⁠TreasuryONE.

Economists also expect SA’s Central bank to leave its main interest rate unchanged at its March 26 policy announcement.

“Monetary policy is ⁠likely to remain tighter for longer over the coming months, delaying rate cuts unless energy prices ease substantially,” said ⁠ETM Analytics in a research note.

SA’s benchmark 2035 government bond was flat in early deals, with the yield at 9.1%.