JOHANNESBURG (Reuters) -The South African rand dropped sharply on Wednesday, as investors dumped riskier assets globally because of worries over the state of the world economy and geopolitical risks after U.S. presidential candidate Donald Trump's remarks on Taiwan.
At 1519 GMT, the rand traded at 18.2350 against the dollar, more than 1% weaker than its previous close.
"The rand and other emerging market currencies are under pressure as there is a general risk-off scenario," said Wichard Cilliers, head of market risk at TreasuryONE.
"The state of the world economy is worrisome and thus the sell-off," Cilliers said.
Geopolitical risks weighed on Wall Street on Wednesday after U.S. presidential candidate Donald Trump sounded lukewarm about defending Taiwan, sending chipmakers' shares lower and helping propel gold prices to record highs.
Some investors use the rand as a proxy for emerging market risk, making it highly volatile.
Local economic data showed on Wednesday that South African retail sales rose 0.8% year-on-year in May, up slightly from April's revised 0.7% increase.
On Thursday, investors will focus on an interest rate announcement by South Africa's central bank and a speech in parliament by President Cyril Ramaphosa laying out priorities for the new coalition government.
A Reuters poll predicted the central bank would leave its main repo rate unchanged on Thursday, but economists expect it to cut rates by 25 basis points to 8.00% in September as inflation cools.
Nkosilathi Dube, a financial market analyst, said this week's rate decision would be an important driver for the rand.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index traded down 0.8%. South Africa's benchmark 2030 government bond weakened, as the yield climbed 4.5 basis points to 9.6%.
(Reporting by Tannur Anders; Editing by Alexander Winning and Emelia Sithole-Matarise)
