Rand vulnerable to weak economic outlook

Johannesburg - The rand was little changed from its previous close against the dollar on Monday with market players likely to tread cautiously in the run-up to inflation data and the medium term budget statement later in the week.

The rand was at R8.6399 against the dollar at 06:46 GMT, just 0.29% up from Friday's close at R8.6650.

Although the currency has rallied significantly since ploughing to a three-and-a-half year low earlier this month as investors fretted about strikes in the mining and transport sectors, an uncertain economic environment is likely to remain a drag on the rand.

Finance Minister Pravin Gordhan will present a mid-term budget statement to parliament against the backdrop of stuttering output from the key mining an manufacturing sectors and recent credit downgrades from Moody’s and Fitch.

“Whilst the rand did make a comeback last week, the recovery needs to be looked at in context and a dose of realism applied,” Tradition Analytics said in a note.

Government bonds edged higher in early trade, with the yields on the three-year benchmark three year and 14-year issues each dipping a basis point to 5.38% and 7.555% respectively.