Johannesburg - The rand remained under pressure on Wednesday as worse than expected PMI figures released on Tuesday kept the rand bulls at bay.
“Today’s response is still on the back of the PMI figures yesterday‚” said Ockert van Niekerk‚ head of trading at PSG. “Equities are also on the back foot today.”
The rand began its move above the R9.22/$ to R9.24/$ level on Tuesday following the release of February’s purchasing managers index figures for March. The seasonally adjusted Kagiso purchasing managers’ index (PMI) lost 4.3 points to 49.3 in March after moving above the key 50-point mark to 53.6 in February.
A PMI below 50 suggests a contraction in activity while that above 50 points to expansion.
“It seems as though the previous bullish move was short-lived‚” said Van Niekerk. “The rand remains vulnerable to local issues even though they aren’t on the front page anymore.”
Labour unrest and an increasing current account deficit were responsible for a marked devaluation in the currency over the past several months.
Van Niekerk said the rand was likely to trade in a wide range for the next few days ahead of the release of US payroll figures at the end of the week.
At 11:29 the rand was bid at R9.2481/$ from R9.2324 at the previous close. The local currency was bid at R11.8620/€ from its previous close of R11.8482 and at R13.9580 against sterling from R13.9519 before.
The euro was bid at $1.2832 from $1.2824 at the previous close.
Two key business confidence indices will be released later today - the Rand Merchant Bank/Bureau for Economic Research (RMB/BER) business confidence index (BCI) for the first quarter‚ and the South African Chamber of Commerce and Industry’s (Sacci) business confidence index for March.
The RMB/BER BCI fell one point to 46 in the fourth quarter of last year from 47 the quarter before. A reading of above 50 indicates optimism as opposed to pessimism if the index level falls below 50.