South African rand weakens as investors watch Middle East developments, await local data
The South African rand weakened on Tuesday as investors stayed cautious while monitoring developments in the Middle East after US President Donald Trump paused a planned attack on Iran.
At 0730 GMT the rand traded at 16.6250 against the dollar, 0.3% weaker than its previous close.
Trump said on Monday he had paused an attack on Iran to allow time for negotiations on a deal to end the war, after Tehran sent a new peace proposal to Washington.
"The longer this conflict continues, the greater the probability that the rand will succumb to pressure or any further shock to the global economy that might undermine economic confidence and risk appetite," said ETM Analytics in a research note.
The US dollar was up 0.2% against a basket of currencies, while prices of gold, a key South African export, fell 0.4%.
Domestic investors' attention will be pinned to April inflation data on Wednesday, with analysts polled by Reuters expecting it to accelerate to 3.9% year-on-year from 3.1% in March, reflecting pressures from the war in the Middle East.
The statistics agency will also publish March retail sales data on Wednesday, though analysts say the figures are unlikely to show weakness as they predate the full impact of the war.
On the Johannesburg Stock Exchange, the Top-40 index was up 0.2% in early trade.
South Africa's benchmark 2035 government bond was flat with the yield at 8.85%.
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