JOHANNESBURG: South Africa's rand weakened against the dollar on Tuesday as the greenback rose ahead of the US Federal Reserve's policy meeting, while a central bank review highlighted the vulnerabilities of Africa's biggest economy.
The rand was at 9.8650 to the dollar at 1443 GMT, down 0.4 percent from Monday's New York close.
The dollar rose against a basket of currencies, driven by position adjustments before the Fed's policy meeting ending on Wednesday. The central bank is expected to maintain its ultra-loose monetary policy.
Meanwhile, South Africa's central bank said in its Financial Stability Review the country's stuttering economy and frequent strikes could lead to further sovereign rating downgrades and the exclusion of the country's bond market from Citibank's global bond index.
Local data released on Tuesday held few surprises. Credit data for September showed growth in credit demand from South Africa's private sector slowed to 7.55 percent year-on-year in September, from a revised 8.11 percent in August.
The unemployment rate fell to 24.7 percent of the labour force in the third quarter 2013, from 25.6 percent in the second quarter.
" The data hasn't had a material impact on the rand. It confirms a lot of things the market already knew," ETM market analyst Luke Barnett said. "The move today has been more dollar driven.
A lot of people are waiting on the sidelines to see what the Fed's assessment is and whether they are going to taper or when they'll taper."
Government bonds were mixed, with the yield on the 2026 government bond inching up 1 basis point to 7.935 percent while that on the 2015 paper was 10 basis points lower at 5.795 percent.
South Africa's Treasury sold a total 2.35 billion rand ($239 million) of its 2023, 2031 and 2037 government bonds on Tuesday.
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