South Africa’s rand weakened to a fresh 21-month low early on Tuesday, as dollar hit a two-decade high on the view that the US Federal Reserve will hike interest rates faster and further than its peers to tackle soaring inflation.

At 0609 GMT, the rand traded at 17.1725 against the dollar, down 0.42% from its last close, the lowest it has been since September 2020.

The dollar index, which measures the currency against six counterparts, rose 0.26% to 108.44.

It had earlier climbed to 108.47, its highest since October 2002.

Analysts have warned that riskier assets such as the rand is at a risk of further weakness as investors seek the safety of dollar at a time of major economic upheavals.

South African rand weakens as dollar finds support

“It is worth pointing out that the dollar strength is broad-based, with the greenback firmer against almost all G10 and emerging market currencies this morning,” ETM Analytics said in a research note.

South African-focused investors will be looking at manufacturing data, which is scheduled for 1100 GMT, for clues on the health of the local economy.

Investors are also keen on US consumer price data due Wednesday, with economists polled by Reuters expecting the index to print an 8.8% annual rate for June.

The government’s benchmark 2030 bond was weaker in early deals, with the yield up 4.5 basis points to 10.810%.