The South African rand weakened slightly in early trade on Monday, as the dollar held near a two-week low with investors paring back Federal Reserve hike bets and oil prices slipping after OPEC+ agreed to raise output targets.
At 0623 GMT, the rand traded at 16.2525 against the dollar FX_IDC:USDZAR, about 0.2% weaker than its previous close.
The U.S. dollar TVC:DXY steadied near a two-week low as investors scaled back bets on a Federal Reserve rate hike this year, while oil prices inched lower after OPEC+ agreed to further increase its output targets from August, while exports from key producers via the Strait of Hormuz were recovering.
ETM Analytics said in a note that the rand's near-term outlook had improved as the U.S. rate hike fears eased, but that the currency's strength was still being framed as conditional rather than structural.
"Whether investors still hold the same appetite to expose their portfolios to South Africa remains debatable," it said.
Like other risk-sensitive currencies, the rand often takes cues from global drivers.
South Africa-focused investors' attention will be on manufacturing (ZAMAN=ECI) data due on Thursday for cues on the health of Africa's most industrialised economy.
South Africa's benchmark 2035 government bond (ZAR2035=) was steady in early deals, with the yield unchanged at 8.2%.