South African rand slips as stronger dollar and oil supply risks weigh
JOHANNESBURG: The South African rand weakened in early trade on Wednesday as a stronger US dollar reduced demand for risk-sensitive assets, while concerns over oil supply risks kept investors cautious. At 0635 GMT 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…
Johannesburg - The South African rand experienced a decline in early trading on Wednesday due to a stronger US dollar, which diminished demand for riskier assets, and apprehensions about potential oil supply disruptions. At 0635 GMT, the rand was trading at 16.5850 against the dollar, marking a 0.3% decrease from its prior close.
The US dollar index increased as investors anticipated the Federal Reserve's September meeting minutes to assess whether policymakers would continue raising US interest rates. Meanwhile, oil prices surged as concerns over a storm impacting US oil fields and Houthi attacks in Saudi Arabia overshadowed the increased Middle East crude supplies.
As South Africa relies heavily on fuel imports, the economy remains susceptible to fluctuations in global oil prices since the US-Israeli conflict with Iran escalated in late February. According to ETM Analytics, the rand has weakened by approximately 3.5% over the past month, as substantial petroleum imports, particularly diesel, have heightened dollar demand and heightened the currency's sensitivity to oil prices.
South Africa's benchmark 2035 government bond exhibited a slight weakening in early trades, with its yield increasing by 2 basis points to 8.825%.
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