JOHANNESBURG: The South African rand held steady in early Tuesday trade, even as investors sought safe-haven assets amid escalating US and Israeli strikes on Iran and fears the conflict could broaden into a longer regional war and add to market uncertainty.
At 0553 GMT, the rand traded at 16.1475 against the US dollar, little changed from Monday’s close of 16.1175.
“At this stage, the ZAR is sitting on the sidelines, as attention is on the EUR and JPY because they import a great deal of oil and gas,” said Adam Phillips, treasury specialist at Umkhulu Treasury.
The dollar firmed 0.2% against a basket of currencies, with gold – a major South African export – extending gains.
Like other risk-sensitive currencies, the rand often takes cues from global drivers such as US policies, in addition to domestic economic data.
South Africa’s benchmark 2035 government bond was also flat in early deals, with the yield at 8.16%. Phillips said there are worries that the conflict could drive up inflation, and economists are now expecting fewer interest rate cuts over the next six months.
“I would be surprised to see the ZAR break below 16.00, just because of its beta status, but for the moment, 16.22 is the resistance level,” he noted.
American Dollar Exchange Rate