The South African rand slipped in early trade on Thursday, on doubts over a fragile two-week ceasefire between the United States and Iran, while traders also assessed domestic economic releases for clues on the health of Africa's largest economy.

The viability of the ceasefire is in question with Israel continuing to attack Lebanon on Wednesday, prompting Iran to suggest it would be "unreasonable" to proceed with talks to forge a permanent peace deal.

At 0706 GMT the rand traded at 16.45 against the dollar, roughly down 0.4% from its previous close. Investors exercised caution as energy-dependent economies stand exposed to oil price volatility, which threatens to stoke inflation and strain economic growth.

South African assets rallied after the news of the ceasefire, with the local currency gaining almost 3% on Wednesday and paring some of the losses amassed since the start of the Iran war.

"Following the initial appreciation, the rand appears to have settled into a range as investors await clarity on the ceasefire agreement, which remains fraught with challenges and distrust," said ETM Analytics in a note.

"This weekend's events will be a critical test of whether the ceasefire holds, as officials meet in Pakistan to begin negotiations," said the firm, adding that the rand is expected to remain range-bound into next week, due to "light positioning and lower volatility."

South Africa's net foreign reserves fell to $73.19-billion at the end of March from $75.84-billion in February, central bank data showed on Thursday.

The country's statistics agency will publish manufacturing output at 1100 GMT, with analysts polled by Reuters expecting a0.3% fall. South Africa's benchmark 2035 government bond was weaker in early deals, as the yield rose 2.5 basis points to 8.495%.