South Africa’s rand weaker as risk rally fades

PUBLISHED: Fri, 22 Jan 2021 07:15:30 GMT

JOHANNESBURG, Jan 22 (Reuters) – South Africa’s rand was weaker early on Friday, as a rally in riskier assets driven by hopes of U.S. economic stimulus faded.

At 0708 GMT, the rand traded at 15.0550 versus the dollar, 0.7% weaker than its previous close.

The decline was in line with other emerging market currencies like the Russian rouble and Turkish lira .

The rand has mainly moved on global factors recently, shrugging off a series of poor domestic data releases that point to lingering weakness in Africa’s most industrialised economy.

This week, retail sales and mining figures for November came in worse than expected.

On Thursday, the central bank kept its main lending rate unchanged, providing some support to the currency.

But analysts at Commerzbank said the rand remained vulnerable, after rising significantly in the last few months of 2020.

“The fragile economy and the high level of government debt, which continues to rise, limit further rand appreciation potential,” they said in a research note.

Government bonds also fell early on Friday, as the yield on the benchmark 2030 instrument increased 3 basis points to 8.75%. (Reporting by Alexander Winning. Editing by Mark Potter)

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