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Johannesburg - The rand held steady against the dollar early on Monday but looked unlikely to gain significant ground amid fresh fears about economic growth in China, a major trading partner to South Africa.
Chinese manufacturing looked as though it contracted in the first quarter of the year as the March Markit/HSBC Purchasing Managers' Index fell to an eight-month low. The index has stayed below the 50 mark, signifying contraction, since January.
The rand was also coming back from a three-week low hit on Thursday after US Federal Reserve chair Janet Yellen said the bank was likely to end its bond-buying programme later this year and could start to raise interest rates six months after that.
South African markets were closed for a holiday on Friday. The local unit managed a slightly firmer open on Monday but remained within Friday's range.
At 08:19, the rand was up 0.2% to R10.8890/$, off a R10.9100 close in New York.
Analysts say the rand will be looking for direction from global markets but initial pressures are to the topside after the poor Chinese data.
Further negative news could drag the rand through the psychologically key R11/$-level.
Later this week investors will train their eyes on local markets as the South African Reserve Bank announces its second monetary policy decision of the year.
The weak rand convinced the bank to hike the repo rate by 50 basis points to 5.5% in January and the market has priced in further tightening as South Africa contends with price pressures that have put inflation at the upper end of the bank's 3% to 6% target band.
Yields on government bonds were steady on Monday morning. The yield on the benchmark 2026 issue was at 8.625% and the 2015 note traded at 7.035%.
Chinese manufacturing looked as though it contracted in the first quarter of the year as the March Markit/HSBC Purchasing Managers' Index fell to an eight-month low. The index has stayed below the 50 mark, signifying contraction, since January.
The rand was also coming back from a three-week low hit on Thursday after US Federal Reserve chair Janet Yellen said the bank was likely to end its bond-buying programme later this year and could start to raise interest rates six months after that.
South African markets were closed for a holiday on Friday. The local unit managed a slightly firmer open on Monday but remained within Friday's range.
At 08:19, the rand was up 0.2% to R10.8890/$, off a R10.9100 close in New York.
Analysts say the rand will be looking for direction from global markets but initial pressures are to the topside after the poor Chinese data.
Further negative news could drag the rand through the psychologically key R11/$-level.
Later this week investors will train their eyes on local markets as the South African Reserve Bank announces its second monetary policy decision of the year.
The weak rand convinced the bank to hike the repo rate by 50 basis points to 5.5% in January and the market has priced in further tightening as South Africa contends with price pressures that have put inflation at the upper end of the bank's 3% to 6% target band.
Yields on government bonds were steady on Monday morning. The yield on the benchmark 2026 issue was at 8.625% and the 2015 note traded at 7.035%.
