South Africa's rand set to firm for fifth day straight

JOHANNESBURG: The rand steadied against the dollar early on Monday, looking to strengthen for the fifth straight session due to a technical correction that has left many investors trying to cover short rand positions.

South Africa's currency was at 8.8547 to the dollar at 0626 GMT, slightly firmer than its New York close on Friday and gathering momentum away from a four-year low of 9.16 rand hit last month.

The rand managed to break past 8.85 resistance in late trade on Friday, signalling that further gains were likely this session.

"Our range for today is 8.79-8.88, and we are favouring a push below 8.75 later in the week," Absa technical strategist Judy Padayachee said, adding that the dollar's turn-around above 9.15 rand sets a bigger bearish bias in the coming weeks.

Charts show the rand could retrace all the way down to 8.60.

Investors have a spew of local data to digest this week, including jobless and manufacturing numbers, which will give key signals on the pace of economic growth in Africa's largest economy.

Friday's Purchasing Managers' Index number was in contraction territory for the fifth straight month in January, pointing to a bleak outlook for the key manufacturing industry this year.

The sector is a major employer and contributes 15 percent of South Africa's GDP.

Sentiment indicators such as the Reuters Econometer and the Business Confidence Index are also due this week.

Domestic media are reporting the ruling African National Congress (ANC) will throw renewed energy into a contentious policy to subsidise the wages of youth workers entering the job market.

The policy, an attempt to deal with South Africa's chronic unemployment problem, met stiff opposition from the ANC's union allies and was never implemented.

Government debt was slightly weaker, with the yields on the 2015 and 2026 issues at 5.335 percent and 7.32 percent respectively.