South African Rand Weakens as Commodity Prices Swing

South African Rand Weakens as Commodity Prices Swing

The South African rand (ZAR) weakened versus crosses as elevated global oil prices dampened demand for western currencies.  The local unit weakened to R16.44 per US dollar, its softest level since early August.

Elevated oil prices in the global commodity market, weaker precious metals and increased demand for the US dollar pressured the local unit, forex market traders said.

Though the South African Reserve Bank recently raised rates to counter mounting inflation risks, higher fuel costs and global uncertainty continue to cloud the growth outlook.

Against other crosses, the rand is trading at R21.74 per pound and R18.68 per euro.

Gold is trading at $4 130 per ounce today after a sharp 4% decline in the previous session, pressured by rising US Treasury yields and growing expectations of further Federal Reserve rate hikes.

The negotiations stalemate between the US and Iran coupled with firmer oil prices sustained inflation concerns. Investors now await key US economic data for additional guidance on the interest rate outlook.

Brent crude rose to $107.12 per barrel, extending recent gains as uncertainty around US-Iran negotiations and the reopening of the Strait of Hormuz continued to support prices.

While Saudi Arabia restored significant pipeline export capacity, limited progress in diplomatic talks and concerns over regional stability kept supply risk premiums elevated. #South African Rand Weakens as Commodity Prices Swing# South African Rand Trades Rangebound Against USD, EUR, GBP