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Markets

South Africa's rand slips on dismal business confidence data; all eyes on ECB

Investors awaited outcome of an European Central Bank (ECB) meeting. South African Chamber of Commerce and Ind
Updated 12 Sep 2019
  • Investors awaited outcome of an European Central Bank (ECB) meeting.
  • South African Chamber of Commerce and Industry's monthly business confidence index fell.
  • Rand Merchant Bank plunged to a 20-year low in the third quarter.

JOHANNESBURG: South Africa' rand fell in early trade on Thursday, after data showed that a gauge of country's business confidence hit its lowest in decades, while investors awaited outcome of an European Central Bank (ECB) meeting.

At 0640 GMT, the rand was 0.12% weaker at 14.6875 per dollar, compared to an overnight close of 14.6700.

On Wednesday, the South African Chamber of Commerce and Industry's monthly business confidence index fell to its lowest level in 34 years in August, hurt by a sharp drop in export volumes and a weaker currency.

A quarterly measurement of sentiment by the Rand Merchant Bank plunged to a 20-year low in the third quarter.

The dismal data sparked a selloff and some profit-taking on the rand, while investors awaited the outcome of an ECB meeting later in the session where the regulator s expected to push interest rates even further into negative territory.

"The move was essentially a result of some pre-hedging ahead of the ECB meeting this afternoon where expectations of some stimulus is expected," Warrick Butler, chief trader at Standard Bank, said in a note.

"A few reports and rumours doing the round yesterday (on Wednesday) suggested this may in fact not be the case and so the market resorted to a bit of dollar buying instead."

Bonds were firmer, with the yield on the benchmark paper due in 2026 down 2 basis points to 8.14%.