South Africa's rand weakens on China, commodity risks - CNBC Africa

South Africa's rand weakens on China, commodity risks

Financial

by Reuters 0

South Africa's rand weakens on China, commodity risks. PHOTO: Money 101

South Africa's rand edged lower in early trade on Thursday with concerns about growth in China and lower commodity prices outweighing positive momentum from hopes of a delay to U.S. interest rate hikes.

The rand was given a brief boost late on Wednesday after U.S. Federal Reserve minutes suggested policymakers were in no hurry to raise interest rates, hitting the greenback.

However, fears that growth in China is slowing has hit emerging market assets around the world in recent weeks.

"Global markets are trading very nervously, caught in a generalised wave of worries that are concentrated on China’s stocks and the fall in commodity prices."

At 0642 GMT the local currency was 0.23 percent weaker at 12.92 per dollar compared with Wednesday's close of 12.89.

South African economic fundamentals are also a lingering concern for investors. Inflation quickened to 5 percent in July, data showed on Wednesday, increasing the chance of more interest rate hikes in the coming months.

Bonds initially rallied on the news, but buying orders soon gave way to selling.

South African government bonds recovered as the yield for the 2026 benchmark fell 5.5 basis points to 8.26 percent.

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