Rand under pressure, risk appetite low

Johannesburg - The rand started the week under slight pressure alongside other emerging market currencies on Monday, with recent data pointing to a weak global economic outlook which should keep risk appetite in check.

The rand was at R8.2675 to the dollar by 06:40 GMT, down 0.42% from Friday’s close at R8.2333.

With little local news to move the market, the rand should take direction mainly from global sentiment, still dour after last Friday’s disappointing US jobs data, traders said.

Manufacturing data due out on Thursday is likely to underpin market expectations that the South African Reserve Bank could cut rates later this year after keeping them at 30-year lows since late 2010.

The market is however expecting the key repo rate to remain at 5.5% after next week’s policy meeting.

“This week’s local data is likely to remain of secondary importance, but if manufacturing and mining data heighten local rate cut expectations then this could hinder the rand from an interest rate differential perspective,” said Absa Capital.

Government bonds were flat in early trade, with the yields on the three year 14-year benchmarks unchanged from Friday’s closing levels of 5.96% and 7.865% respectively.