Loading...
See More

Rand pulls back from rally

Sep 11 2013 09:14 Reuters

(http://www.shutterstock.com)

Related Articles

Weak rand boosts Steinhoff's profits

Current account deficit shock

SA spending growth slows

Rand weakens on current account jitters

Rand retreats, eyes current account data

Asian stocks mostly higher

 
JOHANNESBURG (Reuters) - The rand weakened against the dollar on Wednesday, extending losses prompted by worse-than-expected current account data in the previous session and pulling yields on government debt higher.

The South African Reserve Bank (Ssrb) released poor current account data on Tuesday, showing a widening trade account the economy continued to import more than it exports.

The rand reacted by falling through R10/$r, and was down 0.55% at R10.0345 at 08:18 on Wednesday.

"Global sentiment remains very positive but the rand has been held back by the current account deficit and an unimpressive performance from its compatriot currencies," Rand Merchant Bank currency strategist John Cairns said.

The current account deficit is a sore point for the rand, making South Africa vulnerable to shifts in global investor sentiment since the account is funded by offshore inflows.

"It creates huge risks that the rand could blow out and restricts the unit's ability to stage a significant recovery. Our core view is for a mild recovery from these oversold levels," Cairns added.

With a week to the US Federal Reserve's next policy meeting, investors are likely to play it safe by staying away from risky assets such as the rand until they get clarity on whether it will start reducing its bond-buying programme.

Manufacturing data for July, due at 13:00, is likely to add further pressure on the rand if it underperforms market expectations.

Output was at 0.4% year-on-year in June from 2.1% in May, and fell 3% on a month-on-month basis.

Economists expect a pick-up to 1.5% year-on-year and 2.6% month-on-month, mainly because of an upbeat Purchasing Managers' Index (PMI) number.

The PMI, a leading indicator of manufacturing activity, rose in July and hit a six-year high in August.

Yields on government bonds were up four basis points to 8.365% on the benchmark 2026 bond.

Treasury will announce issuance plans for its weekly bond sale of fixed income debt at 11:00.


 

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

rand  |  currencies  |  markets bonds
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

sponsored content
Sanral arrogant and evasive - JPSA 2014-09-04 09:13

Lawyers representing Justice Project SA have labelled responses they received from Sanral's legal team relating to e-tolls as surprisingly arrogant and evasive.

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...