JOHANNESBURG, (Reuters) - The South African rand fell to a one-month low on Monday, pressured by volatile crude oil prices and risk-off sentiment following the U.S. military action against Iran over the weekend.
At 1354 GMT the rand traded at 18.07 against the dollar , down roughly 0.4% from Friday's close and on track for its lowest day-end value since mid-May.
The greenback was up against a basket of currencies on heightened safe-haven demand, while oil prices were last down 0.3% in choppy trade, as investors anxiously awaited Iran's response.
Market participants are bracing for oil price hikes amid fears that an Iranian retaliation may include the closure of the Strait of Hormuz, through which roughly a fifth of global crude supply flows.
"Prices are likely to remain fairly volatile in the short term as traders await Iran's response to the U.S. attacks," said Andre Cilliers, currency strategist at TreasuryONE.
The rand's weakness coupled with rising oil prices might upset South Africa's inflation outlook, Investec analysts said in a note, adding that possible U.S. interest rate cuts in the coming months would add pressure to the local currency.
Domestically, investors will look to leading indicator and producer inflation data due on Tuesday and Thursday respectively to gauge the health of Africa's most industrialised economy.
The Johannesburg Stock Exchange's Top-40 index last traded up 0.4%. Data released on Monday by the bourse operator showed that offshore investors sold a net 13.72 billion rand ($759 million) of South African stocks last week.
South Africa's benchmark 2035 government bond was weaker, as the yield rose 3 basis points to 10.08%.
Reporting by Sfundo Parakozov and Alessandro Parodi; Editing by Aidan Lewis and Bernadette Baum
Source: Reuters