JOHANNESBURG, June 12 (Reuters) - The South African rand was steady in early trade on Friday as risk appetite returned after U.S. President Donald Trump said a peace deal with Iran could be signed as soon as this weekend.
o At 0639 GMT, the rand traded at 16.30 against the U.S. dollar, little changed from its previous close.
o Trump called off planned strikes on Iran on Thursday, saying talks had progressed and a peace deal that would reopen the Strait of Hormuz to shipping could be signed as soon as this weekend. Iran said it had not approved the text of any agreement.
o The deal, if confirmed, would be the biggest diplomatic step yet toward ending a three-month-old war that has lifted global energy prices.
o The greenback was steady as traders questioned whether a near-term deal would be reached, while oil prices fell more than $1 after Trump cancelled planned strikes on Iran.
o Most Asian emerging-market peers gained, with South Korea's won, Malaysia's ringgit, Indonesia's rupiah and India's rupee strengthening on hopes of a peace deal.
o "The rand will be ending the week very much on the front foot, with an impressive overnight performance following news from Trump that an end to the war in Iran is imminent. Almost immediately, stock markets surged, risk appetite returned and the rand responded," ETM Analytics said in a research note.
o Like other risk-sensitive currencies, the rand has been at the mercy of global market sentiment, particularly since the start of the Iran war in late February.
o South Africa's benchmark 2035 government bond was stronger in early deals, as the yield fell 17.5 basis points to 8.43%.
(Reporting by Nilutpal Timsina; Editing by Jan Harvey)
