South Africa’s rand retreated yesterday, succumbing to a firming US dollar, as rising oil prices globally dented demand for emerging market currencies.
At 0650 GMT the rand was 0,05 percent weaker at 14,4500 per dollar compared to an overnight close of 14,4450.
The rand tumbled to 14,4525 late in the previous session, its softest in three weeks. Fellow emerging market currencies also fell, as a slack business confidence reading in Germany stoked fears of a broader global slowdown.
That benefited the dollar, which rallied to a 23-month high measured against a basket of rival currencies.
With global oil prices galloping to $75 per barrel for the first time in 2019 as the United States tightened sanctions on Iran, investors were also wary of energy-importing economies, fearing the price spike could strain their already stretched current accounts.
“This appears to be a generalised sell-off, with the jump in the oil price stoking fears about oil-importing economies battling external vulnerabilities. Bias is therefore for further rand weakness, especially as EUR/USD languishes,” said analyst at RMB Nema Ramkhelawan-Bhana.
Bonds also weakened, with the yield on the benchmark 10-year issue up 1 basis point to 8,58 percent.
Stocks opened weaker, with the Johannesburg Stock Exchange’s Top-40 index down 0,44 percent to 52,552 points.