South African rand flat as investors await GDP data

Parvez Jabri September 2, 2019

JOHANNESBURG: South Africa’s rand traded sideways on Monday, with investors holding fire ahead of second quarter economic growth figures that could help gauge the future direction for the currency.

At 1530 GMT, the rand was 0.1% weaker at 15.2050 per dollar compared with Friday’s close of 15.1850, extending the currency’s subdued run in the past few sessions, with a break of 15.50 eyed by bears failing to materialise.

Statistics South Africa publishes second quarter gross domestic product figures on Tuesday at 0930 GMT.

Africa’s most developed economy contracted 3.2% in quarter, hit by nationwide power outages by cash-strapped state power firm Eskom. A Reuters poll of economists forecasts Q2 GDP expanding 2.4%.

“Much of this expected lift would be attributable to statistical base effects and the stabilisation of electricity supply rather than to a sustainable turnaround in economic activity,” said Lara Hodes of Investec.

The ongoing trade spat between China and the United States has also dampened demand for emerging currencies.

The United States slapped 15% tariffs on a variety of Chinese goods on Sunday – including footwear, smart watches and flat-panel televisions – while China imposed new duties on US crude oil, heightening fears of a global economic slowdown.

South Africa’s Absa Purchasing Managers’ Index (PMI) declined in August to 45.7 from 52.1 in July, as business activity and new sales orders slumped, reflecting worries about local and global growth.

Bonds rallied on the day, with the yield on the benchmark paper due in 2026 down 7 basis points to 8.16%

Stocks fell in line with subdued global markets amid lower volumes with US markets closed for a holiday on Monday.

On the bourse, the benchmark Top-40 index fell 0.87% to 48,889 points, while the All-Share index dropped 0.86% to 54,785 points.

Sasol, the biggest faller on the bourse, dropped 6.47% to 269.32 rand after lower oil prices and concerns over its Lake Charles Chemicals Project weighed on its shares.

“People are quite negative on Sasol and the oil price has fallen back a little bit over the weekend,” said Greg Davies, trader at Cratos Capital.

Copyright Reuters, 2019

  • Leave a Reply

    Your email address will not be published. Required fields are marked *





    Close