South African rand weakens as investors track fragile Middle East ceasefire

The South African rand was weaker on Thursday on doubts over a fragile two-week ceasefire between the U.S. and Iran, while traders also assessed domestic economic releases for clues on the health of Africa’s largest economy.

The viability of the ceasefire was in question as Israel continued to attack Lebanon on Thursday.

At 1255 GMT, the rand traded at 16.45 against the dollar, down 0.4% from its previous close.

Investors exercised caution as energy-dependent economies stand exposed to oil price volatility, which threatens to stoke inflation and strain economic growth.

South African assets rallied after the news of the ceasefire, with the local currency gaining almost 3% on Wednesday and paring some of the losses amassed since the start of the Iran war.

“Following the initial appreciation, the rand appears to have settled into a range as investors await clarity on the ceasefire agreement, which remains fraught with challenges and distrust,” said ETM Analytics