South African rand falls as dollar jumps on rate outlook

JOHANNESBURG (Reuters) -South Africa's rand lost more than 1% against the dollar on Tuesday as investors tempered expectations for a March interest rate cut from the U.S. Federal Reserve and Red Sea attacks weighed on risk sentiment.

At 1605 GMT the rand traded at 18.9625 against the U.S. dollar, about 1.5% weaker than its previous close.

The dollar was last up 0.6%, around a one-month high against a basket of global currencies.

Hawkish comments from European Central Bank officials at the World Economic Forum on Monday raised doubts that the Fed would cut rates as soon as previously expected, sending the dollar higher.

More attacks on ships in the Red Sea also contributed to a slide in emerging market currencies, analysts said.

"News of a missile strike on a U.S.-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," said Andre Cilliers, currency strategist at TreasuryONE.

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

On the Johannesburg Stock Exchange, the Top-40 index closed with a decline of about 1%.

(Reporting by Nellie PeytonEditing by Andrew Heavens and David Goodman)