South Africa’s rand slips with fragile economic rebound in focus

Nadine Hutton | Bloomberg | Getty Images

South African national flags hang above an advertisement for the new Mandela rand banknotes at the headquarters of the central bank in Pretoria, South Africa, on May 23, 2013.

South Africa’s rand traded weaker early on Wednesday after disappointing manufacturing figures and comments from the central bank underscored the fragility of the recent economic rebound.

At 0700 GMT the rand was 0.35 percent weaker at 12.0750 per dollar compared to an overnight close of 12.0375 in New York, giving up a brief push firmer towards the 12.00 technical pivot seen as a short-term target for rand bulls.

Data on Tuesday showed manufacturing down on a month on month basis in February following a similarly poor print in the previous month, reawakening fears that the country’s economic growth outlook remain uncertain despite the uptick in sentiment.

Later on Tuesday the Reserve Bank warned that 2017’s boom could fade if details on policy reforms were not forthcoming.

With no data releases locally traders said the rand would take direction from industrial and manufacturing data from the United Kingdom as well as comments by European Central Bank chief Mario Draghi and the release of minutes of the Federal Reserve’s last policy meeting.

Stocks opened weaker at 0700 GMT, with the blue-chip Top-40 Index down 0.2 percent at 49,934 points.

Bonds were weaker, with the yield on the benchmark 2026 paper up 1 basis point to 8.115 percent.