South African rand strengthens, global factors in driving seat

JOHANNESBURG (Reuters) -The South African rand strengthened on Monday, with analysts saying global drivers including the Israel-Hamas conflict and U.S. economic data were likely to set the tone for trading this week.

At 1554 GMT, the rand traded at 18.9225 against the dollar, about 0.6% firmer than its previous close.

The dollar index was last trading down about 0.4% against a basket of currencies as U.S. Treasury yields retreated after briefly breaching the 5% level.

Rand Merchant Bank said earlier that the exchange rate had looked comfortable around 19 rand to the dollar but that rising U.S. Treasury yields risked pressuring the rand.

ETM Analytics said in a research note that investor concern that the conflict in the Middle East could spread was boosting demand for safe-haven assets.

“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 said.

Domestic data releases this week include a leading central bank indicator on Tuesday and producer inflation on Thursday while global focus will be on the U.S. GDP data and the Federal Reserve’s preferred inflation gauge.

Shares on the Johannesburg Stock Exchange fell, with the blue-chip Top-40 index closing about 0.4% lower.

South Africa’s benchmark 2030 government bond was weaker, the yield up 2.5 basis points to 10.825%.

(Reporting by Tannur Anders and Bhargav AcharyaEditing by Alexander Winning and Alison Williams)