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Rand under pressure, US rate outlook to set course

Johannesburg - The rand remained under pressure on Monday after the release of weak manufacturing data out of China, a key importer of local commodities.

Traders and analysts expected limited impact from domestic vehicle sales data due out later in the day, with the rand likely to continue being driven by expectations over the timing of interest rate hikes in the United States.

At 06:35 GMT the rand was 0.1% weaker at R12.6850 to the greenback compared with Friday's close at R12.6725.

Government bonds were also slightly weaker, and the yield for debt maturing in 2026 added half a basis point to 8.255%.

The rand has dropped nearly 10% against the dollar this year - hitting a 14-year low of R12.7700 last week - due to investors dumping emerging market assets in anticipation of US interest rates rising.

The rand has been among the hardest-hit emerging market currencies because South Africa relies heavily on portfolio inflows to finance its current account deficit equivalent to nearly 5% of GDP.

"With the market still pretty much split on whether the US Fed (Federal Reserve) will deliver its first rate hike in more than a decade in September, the bulk of the market’s focus will be on this coming Friday’s US non-farm payrolls numbers," BNP Paribas Cadiz Securities analyst Jeffrey Schultz said.

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Rand - Dollar
19.00
-0.5%
Rand - Pound
24.02
-0.5%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.37
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Rand - Yen
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