South Africa’s rand was slightly weaker against the dollar in early Friday trade, with traders expecting pressure on the currency to increase if U.S. jobs numbers due later in the day were better than expected.
The local unit barely moved after central bank data showed domestic net gold and foreign exchange reserves edged up slightly to $41.308 billion in October, while gross reserves dipped to $46.051 billion.[ID:nJ8N11D01K]
The rand, like other emerging market currencies, has lost a lot of ground against the greenback this year, as relatively strong U.S. economic data gives rise to speculation the Federal Reserve will soon begin to tighten monetary policy.
At 0648 GMT, the rand traded at 13.9090 against the dollar, down 0.33 percent from its Thursday closing level at 13.8845.
The rand had pulled back from the brink of breaching 14.0000 in the previous session, a psychologically key level which could easily push it towards September’s all-time low of 14.1600/dollar.
“The South African currency is in a precarious situation ahead of much anticipated US non-farm payrolls report today,” NKC African Economics said in a note.
“If this report is deemed to be on strong side, greenback could garner significant support in view of a possible December rate hike in the U.S., to the detriment of emerging market currencies.”
The JSE securities exchange’s Top-40 futures index was down 0.26 percent, an indication that the actual stock index would open at least 128 points lower at 0700 GMT.
On the debt market, the yield on the benchmark government bond maturing in 2026 ticked up one basis point to 8.455 percent.