Rand softens as investors brace for data

Johannesburg - The rand weakened towards a seven-month low against the dollar on Thursday ahead of output data expected to show the economy's key sectors are not growing.

Investors are bracing for mining and manufacturing numbers, with both sectors forecast to have contracted in July as the effects of strikes and production stoppages hit output.

READ:  PMI dips in June as strikes weigh

Mining is a big foreign exchange earner in South Africa, while manufacturing is the second biggest sector of the economy. Both industries are in recession and dragged the whole economy to a 0.6% contraction in the first quarter of the year.

GDP managed a 0.6% expansion in the second quarter, effectively putting growth at zero in the first half of the year.

READ: Strike stole SA's economic growth

At 08:21, the rand was down over 0.3% at R10.9625 to the dollar. It breached the 11 mark to hit a seven month low in the previous session but is due for a breather after that sharp fall on Wednesday, dealers said.

However, worse-than-expected data may encourage rand bears.

Economists are forecasting a sharp fall of 5.65% in manufacturing in July, from a 0.5% expansion previously.

Mining is expected to contract 6.35% from -5.7%.

Yields on government bonds nudged down two basis points to 8.165% on the benchmark 2026 issue in Thursday's early trade.