JOHANNESBURG: South Africa's rand weakened in early trade on Wednesday, as the dollar hovered near a one-week high, supported by investor expectations the Omicron variant is not likely to delay the US Federal Reserve's expected rate hikes.

At 0605 GMT, the rand traded at 16.0500 against the dollar, 0.2% weaker than its previous close.

The dollar was buoyed by higher US Treasury yields as bond investors geared up for interest rate hikes from the Federal Reserve by mid-year to curb stubbornly high inflation.

South Africa's rand flat in early trade

Fed moves affect emerging markets including South Africa as US interest rate hikes tend to drain capital away from the higher-yielding but riskier markets, weighing on their currencies.

Local investor focus was on a purchasing managers' survey due on Wednesday and reserves figures expected on Friday.

In fixed income, the yield on the 2030 government bond was down 1.5 basis points to 9.415% in early deals.