South African rand weakens in early trade

PUBLISHED: Wed, 02 Jun 2021 07:22:31 GMT

JOHANNESBURG, June 2 (Reuters) – The South African rand weakened early on Wednesday, pressured by a first-quarter increase in unemployment and concerns over how long easy financing conditions would last globally.

At 0640 GMT the rand was 0.3% weaker at 13.8000 against the dollar, having closed at 13.7650 overnight in New York.

The dollar was up in early trade as a pick up in U.S. manufacturing kept bets alive for a quicker normalisation of U.S. Federal Reserve policy.

Mixed local economic data, together with the fresh concerns about higher lending rates in the United States, kept the rand bulls at bay.

South Africa’s unemployment rate rose slightly in the first quarter to a record high of 32.6%, from 32.5% in the fourth quarter of 2020.

The rand’s recent performance, having touched a 27-month best near 13.70, has brought into view long-term technical hurdles, prompting a degree of caution among investors.

“Month-end saw some distinct two-way flow, with exporters flooding the market on the northern hemisphere holiday on Monday. But that all reversed yesterday with strong demand from both locals and offshore,” said Warrick Butler, chief trader at Standard Bank.

“It is symptomatic of current conditions that despite the strong demand, the rand was unable to break through the 13.80 short-term resistance level.”

Bonds were a touch weaker, with the yield on the 2030 government issue up 12 basis points at 8.925%.

(Reporting by Mfuneko Toyana Editing by David Goodman)

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