JOHANNESBURG: South Africa's rand weakened on Monday, succumbing to a dim domestic and global outlook as it swung back to the wrong side of the psychologically important 16 rand per dollar mark.
Stocks kicked off the month on a downbeat tone, taking their cue from major overseas markets on worries about the health of the global economy.
By 1545 GMT the rand had slipped 1.1 percent to 16.0620 against the greenback, weighed down early in the session by a sharp contraction in China's manufacturing activity, a signal that demand in the world's no. 2 economy remained subdued.
Bonds also floundered as last week's rally, on the back of the rand's push to its firmest in two weeks, petered out, with investors limiting bets ahead of United States employment figures due on Friday.
The benchmark 2026 paper added 13 basis points to 9.345 percent.
Traders see the rand struggling to hold on to gains against a strengthening dollar, with a bounce off the 15.80 resistance level keeping the unit above 16.00, especially if employment figures on Friday show the U.S. economy is growing.
Locally, new vehicles sales fell 6.9 percent in January, confirming worries of the slowdown in the economy and souring the good sentiment toward local assets.
"Muted consumption and fixed investment growth rates have combined to undermine GDP growth," said economist at Investec Kamilla Kaplan.
The South African Reserve Bank predicts growth of only 0.9 percent in 2016 for Africa's most industrialised economy.
On the bourse, the blue-chip JSE Top-40 slipped 0.4 percent to 43,881 and the broader All-share index lost 0.18 percent to 49,055.
Telkom featured on the decliners' list after the company said its mobile unit would not reach break-even in March as it had forecast, due to rising interest rates and cost pressures.
The telecoms company's stock dropped 6.63 percent to 59.76 rand, its biggest daily percentage decline in more seven weeks.
Broadly, the market followed in the footsteps of other global markets on worries about a global economic slowdown.
"Investors remain concerned about a slowing global economy, exacerbated by the sharp slowdown in China and emerging markets," Nedbank Capital's Mohammed Nalla said in a note.
Trade was slow with more than 263 million shares changing hands, below last year's daily average of 296 million shares.
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