JOHANNESBURG: South Africa's rand struggled against the dollar on Monday, with traders and analysts seeing scope for further weakness if local trade data comes out softer than expected and the Federal Reserve issues a hawkish statement later this week.
The rand touched a fresh 14-year low of 12.6900 to the dollar, extending Friday's sharp losses, and traded at 12.6235 at 1604 GMT, slightly weaker than its previous close at 12.6165.
Government bonds also ended the session weaker, with debt due in 2026 rising 5 basis points to yield 8.2 percent.
The rand has weakened by 9 percent against the dollar this year, partly due to investors selling off emerging market assets in anticipation that rates will rise in the world's biggest economy.
South Africa's yawning budget and current account deficits make the rand particularly vulnerable to heavy capital outflows.
"Concerns over a US rate hike continue to keep EM currencies, including the rand, on the back foot," Standard Bank said in a note.
"Although we believe that the rand weakness seen since last Thursday may be slightly overdone, the cyclical underpin for the rand remains far from reliable."
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