USD/ZAR: Rand weighed down by risk of wider Middle East conflict

The South African Rand weakened against the US Dollar at the start of the week, with geopolitical tensions being a major driver.

Investor concerns that the Israel-Hamas conflict could spread to other territories was supporting demand for safe haven assets and was weighing on risk-sensitive currencies such as the Rand.

“This means that the rand will be a price taker, with none of the domestic data scheduled important enough to override these international developments,” ETM Analytics wrote in a research note.

Rising US Treasury yields have also pressured the South African currency.

In terms of local macro data, Rand traders will be paying attention mostly to the South African PPI report this week. Statistics South Africa is due to release the official Producer Price Index data for September at 9:30 GMT on Thursday.

As of 9:43 GMT on Monday USD/ZAR was gaining 0.58% on the day to trade at 19.1113. Last week, the exotic Forex pair went up as high as 19.1564. The latter has been the pair’s strongest level since October 10th (19.3634).

Meanwhile, the yield on South Africa’s 2030 government bond was last at 10.780%.