JOHANNESBURG, May 7 (Reuters) - The South African rand strengthened in early trade on Thursday as investors weighed the prospects of a U.S.-Iran peace deal, even as the issue of how to ensure shipments through the Strait of Hormuz appeared unresolved.
o At 0739 GMT, the rand traded at 16.3225 against the dollar, up about 0.4% from its previous close.
o "From a technical perspective, we could still see further strength in the rand, but this will depend on further progress toward a sustainable, peaceful solution in the Middle East," said Wichard Cilliers, head of market risk at TreasuryONE.
o The U.S. dollar was little changed against a basket of currencies, while oil prices rose over $1 on Thursday.
o U.S. President Donald Trump has repeatedly played up the prospect of an agreement that would end the war that started February 28, so far without success.
o Iran said on Wednesday it was reviewing a U.S. peace proposal that sources said would formally end the war while leaving unresolved the U.S. demands that Iran suspend its nuclear programme and reopen the Strait of Hormuz.
o Like other risk-sensitive currencies, the rand often takes cues from global drivers, in addition to domestic economic data.
o On Friday, South Africa-focused investors will assess foreign reserves data for April, which will shed light on the health of Africa's most industrialised economy.
o On the Johannesburg Stock Exchange, the Top-40 index was up about 0.5% in early trade.
o South Africa's benchmark 2035 government bond strengthened in early deals, as the yield fell 10.5 basis points to 8.51%.
(Reporting by Sfundo Parakozov and Nilutpal Timsina;Editing by Barbara Lewis)
