Cape Town - The rand briefly breached R12.50 to the dollar on Wednesday, as it came under pressure from rising US bond yields and local protest action.
By 16:00 the local unit was trading 1.02% weaker at R12.45/$ after hitting R12.53 earlier in the session. It opened the day at R12.32/$.
"With rising US bond yields, a risk-off investor mindset and the local elements including wage protests and Mining Charter uncertainty, the rand remains under pressure and vulnerable to further weakness," said Peregrine Treasury Solutions on Wednesday afternoon.
The last time the rand traded above R12.50 was in December 2017.
Earlier on Wednesday, Peregrine's Bianca Botes noted that the dollar was nearing a 4-month high as the yield on 10-year US bonds neared 3%.
“Pressure is expected throughout emerging markets as the sell-off of riskier assets continues,” she said. Adam Phillips of Umkhulu Consulting said earlier in Wednesday that strong economic data for consumer confidence and new home sales out of the US indicates that the world’s biggest economy will keep growing in quarters to come.
“[The rand could] stay on the back foot for the rest of the week as US yields rule the thinking in the market,” he said.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER