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Johannesburg - The rand weakened on Thursday to its lowest
level against the dollar in a week after a contraction in the China’s
manufacturing sector hit investor sentiment towards emerging market currencies.
The rand was almost a percent weaker at R8.3338 at 06:32 GMT
against the dollar, from Wednesday’s New York close of R8.3370, earlier in the
session it hit a week high at R8.3530.
Bonds yields were little-changed ahead of a central bank
interest rate decision due after 13:00 GMT. Twenty-five of 28 economists polled
by Reuters said they expected rates to be left unchanged at their 40-year low
of 5.0%.
Also contributing to the rand weakness were fears that a
wage settlement that ended a deadly strike at Lonmin’s Marikana mine is
prompting other workers in the platinum belt to demand similar deals.
Manufacturing in China contracted for the 11th month in a
row in September, according to an HSBC survey of factory managers that
indicated the world’s second-largest economy remains on track for a seventh
quarter of slowing growth.
“The rand weakened overnight just on the back of the Chinese
manufacturing data coming in again at sub 50,” said Brigid Taylor, head of
institutional sales at Nedbank.
“The data just signifies that the Chinese economy is not
growing to the extent that we expecting.”
Fixed income dealers traded cautiously, waiting to pick up
the tone from the Reserve Bank’s monetary policy statement later this
afternoon.
Yields on the benchmark bonds were little-changed, with the three year bond slipping half a percent to 5.4% and the longer-dated 14-year issue losing one basis point to 7.485%.
