JOHANNESBURG: The South African rand was weaker in early trade on Tuesday, as investors remained cautious ahead of a deadline set by U.S. President Donald Trump for Iran to reopen the Strait of Hormuz.
At 0737 GMT the rand traded at 16.93 against the dollar, down about 0.4% from its previous close.
Iran and Israel traded attacks as Tehran refused to reopen the Strait of Hormuz and accept a ceasefire deal on the eve of Trump’s deadline to agree to his demands or get “taken out.”
War in the Middle East and the closure of the chokepoint in the Persian Gulf have sent energy prices soaring, with oil prices currently holding above $110 a barrel.
The rand has been at the mercy of global market sentiment since the U.S. and Israel started the war at the end of February and Iran retaliated.
The local currency fell about 6% last month with economists expecting inflation to rise in the net energy-importing nation.
“Global traders are walking on eggshells at the moment,” said ETM Analytics in a note, adding that further updates on the war will offer directional clarity.
“At face value, it still appears that the U.S. and Iran are worlds apart, with neither willing to negotiate on the other’s terms,” said the note.
Domestic investors will analyse the March S&P Global Purchasing Managers’ Index (PMI) for clues on the health of Africa’s largest economy.
The U.S. dollar was flat against a basket of currencies as global traders awaited minutes of the Fed’s March policy meeting on Wednesday, as well as U.S. inflation indicators including the Personal Consumption Expenditures (PCE) and Consumer Price Index (CPI) data later this week.
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