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Rand up but fragile as weak jobs numbers weigh

May 10 2016 10:19

Johannesburg - The rand steadied on Tuesday but remained near one-month lows as gloomy economic prospects continued to weigh on sentiment after the unemployment rate rose to a record high.

READ: Unemployment soars, hits highest rate since 2008

By 08:45, the rand had inched 0.2% firmer to R15.1690/$, the unit's softest level since April 8.

Government bonds were weaker, with the benchmark paper due in 2026 adding 1 basis point to 9.155%.

The rand rallied briefly to below 15.00 in overnight trade as global commodity prices recovered and modest consumer inflation data in China cheered emerging assets.

Traders however said the rand was vulnerable to another bout of weakness after falling by more than 2% in the previous session, as the dollar gained and concerns over domestic economic growth weighed.

"Commodity markets are stable again this morning, and this has fed into the rand and other commodity currencies. However, sentiment is extremely fragile," said currency strategist at Rand Merchant Bank John Cairns in a note.

Hopes that South Africa could avoid downgrades to its sovereign debt evaporated after the national jobless rate raced to 26.7% in the first quarter, its highest level on record.

READ: Unemployment soars, hits highest rate since 2008

Moody's kept its rating unchanged over the weekend. Fitch and Standard & Poor's, who both have South Africa's debt just one step above subinvestment grade, are due to make their ratings decisions in June.

On the stock market, the Top 40 futures index index was up 0.46%, indicating the bourse would open higher.

rand  |  markets  |  currencies
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