Rand seen weakening in risk-off trade

Johannesburg - The rand was a shade softer against the dollar early on Thursday and was seen weakening further after escalating tensions in the Middle East hit investor appetite for riskier assets.

The South African Reserve Bank's policy statement is unlikely to offer any surprises, with all 35 economists polled by Reuters expecting the benchmark repo rate to stay unchanged at 5.75%.

At 08:20 the rand was trading at R11.8750/$, 0.19% weaker than its New York closing level.

Risk appetite took a knock from news that Saudi Arabia and its Gulf Arab allies had launched air strikes in Yemen against Houthi fighters who have tightened their grip on the southern city of Aden.

"The rand is at risk of further losses today as risk-off sentiment grows," RMB analyst John Cairns said in a note.

"Risk-off was triggered by the Saudi air strikes on Iran-backed rebels in Yemen and has spread into a sharp jump in the oil price and aggressive falls on Wall Street."

In fixed income, the yield on the 2026 benchmark was up 4 basis points to 7.655%.