JOHANNESBURG: South Africa's rand fell more than 1 percent against the dollar on Friday before recouping the losses, but remains vulnerable to a weak outlook for the domestic economy in the near term.
Stocks ended weaker after US jobs data came in lower than forecast adding to concerns over the pace of economic growth that have weakened investors' appetite for risk globally.
The rand retreated to 15.1800 to the greenback, its weakest in a month, after the International Monetary Fund said South Africa faced a challenging economic environment, with growth in 2016 seen at just 0.6 percent. However, it clawed its way back to 14.8760 by 1609 GMT, up 0.6 percent from Thursday's close, helped by broadbased dollar weakness after US non-farm payrolls numbers came in well below forecast.
Traders however said the prognosis was for further rand weakness in the days ahead. "We've got local factors which are pointing towards, not a recession, but stagflation. And if the US and the rest of the world start to slow down then there's nowhere to hide for the rand." Bidvest Bank chief dealer Ion de Vleeschauwer said.
"It's going to remain a problematic scenario for the currency going forward." On the stock market, the All-Share index closed down 0.99 percent to 51,417 with the benchmark Top-40 index falling 1.14 percent to 45,101.
Some traders had been cautious before the release of the US jobs data, which came in slightly below-forecasts, Nedbank Private Wealth's trader Nolan Macnamara said.
"There was a slight miss on those which obviously caused a lot of volatility in both the rand, gold, platinum and US futures," he said.
Further losses on the bourse were capped by a strengthening gold sector, which saw AngloGold Ashanti surging 7.18 percent to 244.01 rand and Gold Fields climbing 8.71 to 68.38.
On the fixed income market, government bonds ended the day firmer, with the yield for debt due in 2026 falling 5.5 basis points to 9.13 percent.
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