South African rand weakens as Red Sea tensions push dollar up

South Africa's rand weakened early on Tuesday as more attacks on ships in the Red Sea weighed on risk sentiment and hawkish comments from the World Economic Forum pushed the dollar higher, analysts said.

At 0718 GMT, the rand traded at 18.8350 against the U.S. dollar , about 0.8% weaker than its previous close.

The dollar was last up about 0.3% against a basket of global currencies.

"News of a missile strike on a US-owned ship in the Gulf and Donald Trump's overwhelming win in the Iowa caucus has seen risk-off in markets and a stronger dollar," Andre Cilliers, Currency Strategist at TreasuryONE, said.

Hawkish comments from European Central Bank officials in Davos also spurred investors to pare back bets on near-term rate-cuts by the U.S. Federal Reserve, further boosting the dollar.

There were no economic data releases scheduled in South Africa on Tuesday.

South Africa's benchmark 2030 government bond was weaker in early deals, with the yield up 4.5 basis points to 9.770%.

Article and image originally appeared on Reuters