Cape Town - The rand lost more than 1% against the US dollar in early trade on Monday on the back of a rally in US assets and a spike in the oil price.
By 11:21 the local unit was trading 1.43% weaker at R12.27 against the greenback. The rand last traded at this level in mid-January 2018.
Brent crude was trading up 0.38% at $73.07 a barrel.
"Currently all emerging markets are coming under pressure, but the rand is really bearing the brunt," said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.
This pressure is expected to continue as the uptick in US capital market yields filters into the market, she added.
“This morning we have seen the rand spiking on the back of the oil price rallying and the implications this has on the US inflation and Treasury yields,” said TreasuryONE in a snap note. “Should US inflation increase quicker than expected we will see more rate hikes and this is dollar positive. The US dollar is on the front as sentiment has shifted away from emerging markets.”
RMB Global Markets Research and Sales noted that the dollar had strengthened against most major currencies, with the Bloomberg US dollar index gaining 6.7% since Friday.
With little local economic data set for release on Monday, the rand would likely take its cue from offshore sentiment, noted TreasuryONE.
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