Johannesburg - South Africa's rand weakened against the dollar on Thursday as risk appetite dissipated along with escalating tensions between Ukraine and Russia.

Ukraine's president said Russian forces had entered the country and the conflict was worsening, while NATO said that over 1,000 of Russia's troops were operating inside its ex-Soviet neighbour.

The rand traded at 10.6475 to the dollar at 17:58 SA time down 0.35 percent on its previous close in New York.

The local unit hit a session low of 10.6850 earlier.

The dollar was also buoyed by better-than-expected growth data out of the world's biggest economy in the session.

South Africa released July inflation data earlier, which came in slightly above market expectations at 8.0 percent.

Analysts said the higher number justifies some market forecasts that the Reserve Bank will keep hiking interest rates this year. The bank has raised rates by 75 basis points since January, as a weak rand exchange rate fans inflation.

Yields on government bonds followed the rand weaker, with the benchmark 2026 issue dropping 10 basis points to 8.065 percent.

“It's partly due to the weaker rand and bonds taking a breather after the strong yield falls over the last couple of days. We've seen some selling but nothing dramatic,” a local bond trader said.

Domestically the rand will next contend with trade figures on Friday, data that has traditionally been a sore point for the economy as South Africa's current account deficit is largely funded by offshore inflows. - Reuters