Rand weaker ahead of Zuma speech

2011-02-10 09:11

Johannesburg - The rand softened against the dollar on Thursday ahead of official data expected to show a year-on-year slowdown in manufacturing output for December.

Markets will also watch President Jacob Zuma's speech to open parliament later in the day for hints of economic policy shifts and pointers on whether the government is making headway in bringing nagging unemployment down.

But domestic factors should largely take a back seat, with the rand taking its cue mainly from global markets.

At 08:51, the rand traded 0.47% softer at 7.2450 against the dollar from Wednesday's close at 7.2110.

Traders said factory production numbers due out at 13:00 were unlikely to change the view the central bank will leave interest rates unchanged this year, after slashing them by 650 basis points between 2008 and late 2010.

"I think we're still being run by global factors rather than domestic factors at the moment. We're going to track the euro for the moment and the range for dollar/rand should be about 7.18 - 7.28," Nedbank trader David Gracey said, adding Zuma's speech should have little impact.

"I expect the president to talk a lot about creating employment, but I don't think there are going to be major policy changes that are going to bring about market movement," he said.

The rand fell sharply to near 6-month lows against the greenback last week, with some analysts pointing to a sell-off of local bonds by foreigners as the lure of emerging market assets palls.

Latest data from the JSE on Monday pointed to net bond sales of R5.7bn by foreign investors since the start of the year, compared to next purchases of R1.8bn over the same period in 2010.