Rand falls as Trump’s Iran pullout rattles sentiment

South Africa’s rand tumbled on Wednesday after U.S. President Donald Trump’s decision to pull out of an international nuclear deal with Iran hit global risk sentiment, but stocks closed stronger.

At 1506 GMT, the rand traded at 12.6075 to the dollar, down 0.32 percent from its close on Tuesday, after earlier weakening more than one percent to 12.7200.

Currencies of developing nations have been under pressure after the dollar started a relentless ascent in mid-April and U.S. Treasury yields climbed above the psychological 3 percent threshold.

Adding to their woes was Trump’s decision on Tuesday to pull out of an international nuclear deal with Iran, hurting risk appetite and sparking worries about fresh tension in the Middle East and global oil supplies.

“With both oil price and rand volatility likely in the traditionally more risk averse period in the middle two quarters of the year, South Africa could see even more rand weakness if Trump heats up the rhetoric further,” Investec chief economist Annabel Bishop said.

In fixed income, the yield for the benchmark government bond due in 2026 rose 6.5 basis points to 8.455 percent, reflecting weaker prices.

In the equities market, the Johannesburg All-Share index climbed 0.43 percent to 57,915 points, while the Blue chip Top-40 index rose 0.54 percent to 51,273 points.

The reaction to Trump’s decision in the South African stock market was largely muted, with MTN Group being one of the few affected firms.

The South African telecoms firm said on Wednesday that Trump’s decision may limit its ability to repatriate cash from MTN Irancell, sending its shares lower.

At market close, it pared losses, closing 0.58 percent weaker at 124.22 rand.

Internet and entertainment firm Naspers struggled to hold on to its gains after saying it sold its entire 11.18 percent stake in Indian-e-commerce firm Flipkart to Walmart Inc for $2.2 billion.

The market heavyweight had gained more than 1.5 percent. It closed flat at 3,076 rand.