JOHANNESBURG: South Africa's rand weakened against the dollar on Thursday, in line with other commodity currencies, after the US Federal Reserve disappointed investors hoping for more bond-buying to revive the world's biggest economy.
The rand dropped 1.1 percent to 8.3177 against the greenback at 0647 GMT from last night's New York close of 8.2250.
"The euro is a little bit lower, commodity currencies are under pressure on bad Australian employment data put out while we were sleeping," said Jim Bryson, a trader at Rand Merchant Bank.
The dollar gained overnight after minutes from last month's Federal Reserve meeting showed additional asset-buying by the Fed was not imminent and likely to occur only if US economic conditions worsened.
The overall damp sentiment was exacerbated by a surprise drop in Australian employment in June which put commodity currencies such as the rand even further on the back foot.
However, foreign appetite for South African bonds remains at record levels, with the yield on three-year paper dropping 3.5 basis points to another new low of 5.85 percent while that on the longer-dated 14-year paper fell 6.5 basis points to 7.685 percent.
South Africa is due to release manufacturing output data for May at 1100 GMT. Ten economists surveyed by Reuters expect factory output to growth to slow at 1.0 percent on an annual basis from 1.2 percent in April.
The brake in manufacturing output is likely to back the case for an interest rate cut in Africa's biggest economy, further increasing foreign demand for local bonds ahead of the country's inclusion to Citi's World Government Bond Index in October.
Comments
Comments are closed for this article.