Johannesburg - The rand was firmer against the dollar in
early Thursday trade, getting a reprieve from the beating that took it to a
three-and-a-half year low this week amid fears about the effects on growth of
prolonged mining and truckers’ strikes.
News that some truckers were slowly returning to work on
Wednesday cheered the rand, lifting it to its best level in three days.
By 06:30 GMT on Thursday the unit was at R8.7050 to the
dollar, 0.4% firmer than its R8.7385 close in New York.
The unit was just shy of R9/dollar on Monday when it hit a
major barrier and firmed back to R8.80 levels, sparking market speculation that
the central bank had come in to buy rand and stop the tumble beyond the key
psychological level.
However, on Wednesday Reserve Bank governor Gill Marcus reiterated that even though the rand was not at its fair value, the bank did not target a level for the currency.
Marcus also sounded a warning about the deteriorating
domestic economic outlook and large outflows from the equity market.
Data shows offshore accounts sold double the amount of
shares than bonds in the last week as strikes in Africa’s largest economy caused
doubts in investors’ minds about the logic of committing money to South Africa.
Government bonds were weaker, with the yield at 5.405% on the benchmark 2015 bond and at 7.73% on the 2026 issue.
Bonds have recovered with the rand in the past two days but
a switch auction later in this session is likely to keep the market under
pressure until just after 09:00 GMT, when the auction closes.
The Treasury is hoping to switch about R2bn of 2014 bonds
into the 2026 and 2023 issues, to roll over the 2014 redemptions.
Mining production data for August is due at 09:30 GMT and
manufacturing numbers at 11:00 GMT, which will give an indication of the health
of the key productive sector. Mining strikes in August are likely to result in
depressed mining output.
Economists polled by Reuters expect manufacturing production to have contracted 1.1% in August from a 5.8% rise in July.