The South African (SA) Rand weakened in early trade on Wednesday as a stronger United States (US) Dollar reduced demand for risk-sensitive assets, while concerns over oil supply risks kept investors cautious.
The Rand traded at 16.5850 against the Dollar , about 0.3% down from its previous close.
The US Dollar index edged higher as investors awaited the minutes of the Federal Reserve’s September meeting for clues on whether policymakers remain inclined to raise US interest rates further.
Oil prices rose as supply risks from a storm threatening US oil regions and Houthi attacks on Saudi Arabia outweighed increased Middle East crude supplies.
SA imports most of its fuel, leaving the economy vulnerable to swings in global oil prices since the US-Israeli war against Iran began in late February.
ETM Analytics said in a note that the rand has been about 3.5% weaker over the past month as high petroleum imports, especially diesel, created sustained Dollar demand and increased the currency’s sensitivity to oil prices.
SA’s benchmark 2035 government bond was slightly weaker in early deals, with the yield rising by 2 basis points to 8.825%.
–Reuters–
