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Johannesburg - The rand extended losses against the dollar on Tuesday, and could stay under pressure in a market now seeing a slim chance of a domestic interest rate cut this month.
At 08:40, the local unit traded at R11.6760 to the dollar, a 0.33% decline on Monday's close at R11.6375.
"Technically, the break and close above 11.6240 now opens the way for a further extension to 11.8000 on which is likely to be a really volatile move to hit our long-term objective of at least 12.20," Standard Bank trader Warrick Butler said.
In fixed income, the benchmark 2026 instrument was yielding one basis point higher at 7.435%.
Concerns about the weak state of the global economy have kept appetite for high yielding but riskier emerging market assets depressed since the start of the year.
On the local front, market watchers were on Tuesday keeping an eye on mining production data due at 11:30 for the latest pointer the domestic economy, which has struggled to grow meaningfully since a 2009 recession.
Weak growth, coupled with receding inflation pressures because of a sharp drop in oil prices, leave the door open for the South African Reserve Bank to cut rates this year, possibly at its first 2015 policy meeting ending on January 29.
"The bottom line is that (policy easing) is possible, although still not probable," Rand Merchant Bank currency analyst John Cairns said in a note.
"Nevertheless, the sharp drop in short-term interest rates - from expecting ongoing hikes to expecting rates to be on hold - implies that the large interest rate differential has been slightly eroded."
At 08:40, the local unit traded at R11.6760 to the dollar, a 0.33% decline on Monday's close at R11.6375.
"Technically, the break and close above 11.6240 now opens the way for a further extension to 11.8000 on which is likely to be a really volatile move to hit our long-term objective of at least 12.20," Standard Bank trader Warrick Butler said.
In fixed income, the benchmark 2026 instrument was yielding one basis point higher at 7.435%.
Concerns about the weak state of the global economy have kept appetite for high yielding but riskier emerging market assets depressed since the start of the year.
On the local front, market watchers were on Tuesday keeping an eye on mining production data due at 11:30 for the latest pointer the domestic economy, which has struggled to grow meaningfully since a 2009 recession.
Weak growth, coupled with receding inflation pressures because of a sharp drop in oil prices, leave the door open for the South African Reserve Bank to cut rates this year, possibly at its first 2015 policy meeting ending on January 29.
"The bottom line is that (policy easing) is possible, although still not probable," Rand Merchant Bank currency analyst John Cairns said in a note.
"Nevertheless, the sharp drop in short-term interest rates - from expecting ongoing hikes to expecting rates to be on hold - implies that the large interest rate differential has been slightly eroded."
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