Johannesburg - South Africa's rand extended losses against the dollar early on Monday after a statement by US Federal Reserve Chair Janet Yellen on Friday signalled the bank was on course to raise interest rates later this year, stoking greenback buying.
By 06h45 GMT the rand had softened 0.28 percent to a week-low of 12.0690 per dollar, remaining above the crucial technical level that is likely to see the unit weaken further towards 2002 lows of 12.6500.
The rand flirted with three-week highs in the previous week before capitulating to a firming dollar, as inflation pressures increased with local petrol prices set to rise 14 percent on Wednesday.
A wage dispute between South African public sector unions demanding a 10 percent wage hike, against an offer of 5.8 percent, is also likely to pressure the unit.
“The fact that government hasn't made any tangible progress on this matter remains a concerning overarching factor for the rand,” said economists at ETM Analytics in market note.
Government bonds were also weaker, with the benchmark issue due in 2026 adding 5 basis points to a week-high of 7.88 percent.
Reuters