Rand falls as oil retreat rekindles growth worries

Johannesburg - The rand weakened in early trade on Wednesday as falling oil prices sparked a flight of capital into safer assets, dulling the appeal of the local currency.

Stocks were set to open weaker at 09:00, with the JSE securities exchange's Top-40 futures index shedding 0.41%.

At 08:40 the rand was down 0.31% at R16.2700/$ compared with Tuesday's close, pulling away from below the psychological 16 level it touched on Friday.

Oil prices continued to decline, stoking global risk-off sentiment as renewed worries over global growth came into focus.

READ: Oil extends deep losses, WTI falls below $30

"Global risk assets have taken a renewed hit. Risk sentiment seemingly remains driven by, or at least correlated with the oil price," Rand Merchant Bank's currency strategist John Cairns.

The change in sentiment coincided with the news that the World Bank cut South Africa's 2016 growth forecast from 1.3% to 0.8% on Tuesday.

READ: SA economy 'flirting' with recession - World Bank

The forecast was in line with the latest projections from the South African Reserve Bank and the International Monetary Fund, which expect 2016 growth to be 0.9% and 0.7% respectively.

In fixed income, government bonds also weakened. The yield for debt maturing in 2026 rose 3 basis points to 9.425%.