South African rand slides as oil price surge pressures emerging market currencies
JOHANNESBURG: South Africa’s rand weakened against the dollar on Tuesday as a stronger greenback, high energy prices, and softer precious metals heightened concerns over inflation and a wider import bill. At 0815 GMT the rand traded at 16.33 against the dollar , 0.4% down from its previous close. Oil prices rose nearly 2% on Tuesday as concerns over supply disruptions lingered after attacks on…
Johannesburg - South Africa's rand slipped against the dollar on Tuesday, as the greenback strengthened and rising oil prices fueled worries about inflation and the country's growing import bill. The currency fell 0.4% to 16.33 per dollar at 0815 GMT, down from its prior level.
Ongoing concerns over potential supply disruptions in Saudi Arabian oil, following attacks on the country's energy infrastructure which halted the East-West pipeline, added to the pressure on the South African currency. As a net importer of oil, this makes South Africa particularly sensitive to fluctuations in crude prices.
Meanwhile, gold, which is a major export for South Africa, declined 0.2% to $4,287.69 per ounce, after hitting its lowest level since August 7 on Monday. This further contributed to the downward pressure on the local currency, according to Wichard Cilliers, head of market risk at TreasuryONE. However, the primary concern remains the impact of high oil prices on the economy.
The Johannesburg Stock Exchange's Top-40 index ended the day down 0.7%, while South Africa's benchmark 2035 government bond showed a slight weakening as its yield increased by 6.5 basis points to 8.89%.
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