JOHANNESBURG: South Africa's rand and government bonds weakened on Tuesday but stayed within ranges set in the previous session as a thin domestic data calendar caused dealers to look offshore for direction.
The rand traded at 11.0005 to the dollar at 0635 GMT, level with its close in New York. South Africa's currency is coming back from two-week lows hit on Monday when commodity-linked currencies were pressured by low Chinese manufacturing data.
Domestically the rand is dogged by electricity supply constraints, with power utility Eskom implementing rolling blackouts at the weekend, and persistent shortfalls on its budget and current accounts.
The Reserve Bank (SARB) said overnight imbalances in the economy had grown "more uncomfortable", with financial conditions becoming less hospitable for countries with large financing requirements.
"The rand's vulnerability stems from the large current account deficit," Carmen Nel at Rand Merchant Bank said in a market note.
"The SARB's Monetary Policy Review noted this and indicated that the bank expects ongoing rand volatility and a weakening bias. Yet normalisation is expected to be very gradual, leaving the unit susceptible if the Fed were to embark on earlier tightening."
Yields on government bonds rose 4.5 basis points to 7.62 percent on the benchmark 2026 issue, coming back from a 2014 low hit in the previous session as a lower oil price cheered on bonds.
Treasury is issuing 2.35 billion rand in 2031, 2032 and 2036 bonds at auction.
Results are due after 0900 GMT.
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