South Africa's rand weakens, testing key support level - CNBC Africa

South Africa's rand weakens, testing key support level

Financial

by Reuters 0

South Africa's rand weakens, testing key support level. PHOTO: Money 101

South Africa's rand extended losses against the dollar to a fresh 14-year low on Tuesday as expectations of hawkish minutes from the U.S. central bank sapped risk appetite.

At 0620 GMT the rand slipped 0.2 percent to 12.9345, edging closer to the 13/$ support level it last touched in the fourth quarter of 2001.

A run beyond 13 rand per dollar could trigger technical selling, traders noted.

"Any hawkish signals contained in Wednesday’s U.S. Fed meeting minutes could send the rand over edge," analysts at NKC African Economics said in a note.

The minutes, due on Wednesday, are expected to strike a hawkish note with recent data out of the U.S. economy painting an upbeat growth scenario, bolstering bets of a September interest rate lift-off.

U.S. July inflation figures are also due on Wednesday, having inched up in June, supporting the case for a rate hike before year-end.

Yields on government bonds edged up, with the benchmark paper maturing in 2026 adding 1 basis point to 8.225 percent.

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