South African rand weakens as dollar firms and oil steers direction
The South African rand weakened in early trade on Friday, pressured by a firmer US dollar, while oil market developments played an increasingly important role in shaping the currency's direction.
At 0701 GMT the rand traded at 16.85 against the dollar,about 0.5% down from its previous close. The dollar has emerged as one of the clearest safe-haven winners, strengthening over 2% so far this month.
The dollar rose 0.2% against a basket of currencies as Federal Reserve Chair Jerome Powell signalled one rate cut this year, while hawkish comments from the ECB, BOE, BOJ and Swiss National Bank pointed to possible tightening amid inflation concerns driven by higher energy costs.
"The local currency will continue to take its cue from international moves, with a keen focus on what the oil price does," said Andre Cilliers, Currency Strategist at TreasuryONE. Domestically focused traders will next week look to the composite leading business cycle indicator by the central bank, and producer inflation data by the statistics agency for clues on the health of Africa's most industrialised nation.
South Africa's benchmark 2035 government bond was firmer in early deals, as the yield fell 5.5 basis points to 8.995%.
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