Market News

JOHANNESBURG, May 15 (Reuters) – South Africa’s rand weakened in early trade on Friday as a stronger dollar and rising oil prices weighed on risk sentiment, with global markets also watching the final day of the summit between U.S. President Donald Trump and China’s Xi Jinping.

At 0654 GMT, the rand traded at 16.6426 against the dollar about 1% down from its previous close.

The greenback was firmer against a basket of currencies and was set for its biggest weekly gain in more than two months.

Global oil prices rose more than 1% after Trump said China wanted to buy oil from the U.S. and as concerns persisted over ship attacks and seizures in the Strait of Hormuz despite Iran saying around 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, adding that rate hike and inflation fears were weighing on risk sentiment.

Like other risk-sensitive currencies, the rand often takes cues from global drivers. It has been at the mercy of global 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, as the yield rose 1 basis point to 8.765%.