S.Africa's rand softer ahead of mining, factory data; stocks seen falling

by Reuters 0

South Africa’s rand retreated against the dollar on Thursday, mainly tracking weaker Asian markets as investors remained concerned about the global impact of sluggish growth in China.

On the local bourse, the blue-chip Top-40 futures index was down 0.64 percent, a move likely to translate in the actual share index opening 283 points lower at 0700 GMT.

Stuttering output in the world’s second largest economy has pushed commodity prices lower, hitting emerging markets like South Africa that export to the world’s second-largest economy.

Traders and analysts said mining and manufacturing production data due out at 0930 GMT and 1100 GMT would provide key pointers on whether South Africa’s own economy could be headed for a recession after contracting in the second quarter.

At 0649 GMT the rand traded 0.44 percent softer at 13.8600 per dollar compared with Wednesday’s close in New York.

The rand has lost nearly 20 percent of its value against the dollar since the start of the year, victim to concerns about lacklustre domestic growth and a general sell-off in emerging markets as U.S. interest rates are set to rise this year.

“Heightened global risk aversion, a reduction in the rand’s carry appeal, price action, seasonality trends and waning portfolios suggest that the rand remains vulnerable even in the short term,” Barclays Africa strategist Mike Keenan said.

Government bonds were similarly weaker, with the yield for the 2026 benchmark climbing 5.5 basis points higher to 8.53 percent.