South Africa's rand retreat as global risk demand slumps
- "After having made considerable gains over the course of the month thus far, a combination of factors saw the rand retreat," said analysts at Nedbank in a note.
JOHANNESBURG: South Africa's rand weakened early on Wednesday after a sharp fall in the previous session as global risk demand retreated and some investors took profits on the local currency's recent rally.
At 0700 GMT the rand was 0.56% weaker at 14.7350 per dollar, its softest level in seven days, following a rally to a one-year best earlier in the week as investors betting on a faster global economic recovery chased the high yield on local assets.
But overnight trade saw investors reassess bets on the pace and distribution of a global recovery, with signs of quicker economic activity and inflation in the United States prompting fresh demand for the greenback and US bonds.
Locally, delays in the COVID-19 vaccine rollout and caution ahead of the budget speech next week dampened demand.
The country paused the rollout of AstraZeneca's vaccine this month, after preliminary trial data showed it offered minimal protection against mild to moderate illness from the country's dominant coronavirus variant.
"After having made considerable gains over the course of the month thus far, a combination of factors saw the rand retreat," said analysts at Nedbank in a note.
"Both as it failed to make any headway beyond the support at 14.40 and on talk by an international bank suggesting that any long rand positions be squared out to its clients."
Bonds also weakened, with the yield on the benchmark 2030 government issue up 6.5 basis points to 8.690%.
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