JOHANNESBURG: The rand weakened against the dollar on Monday, with negative domestic fundamentals preventing a sustained rally by South Africa's currency after a weak U.S. jobs number.
The rand was down nearly 1 percent at 10.7535/dollar at 1533 GMT, off a 10.6500 close in New York on Friday.
It won some reprieve from weaker-than-expected U.S. non-farm payrolls on Friday, but pared those gains on Monday.
"A pronounced recovery in the local unit remains unlikely given persisting poor underlying fundamentals," market analysts at Tradition Analytics said in a note to investors.
South Africa is running wide budget and current account deficits, whose funding is threatened by the U.S. Federal Reserve closing the tap on the cheap money that has flowed to emerging markets.
Investors have been persistently selling South African assets on concerns about the impact of U.S. tapering. Official data on Monday showed the trend was continuing, with offshore accounts off-loading 1.7 billion rand from the bond market and 3.7 billion rand of stocks.
Africa's largest economy is also struggling to see substantial benefits to its exports from the weak rand, which is now at its weakest since the depths of the 2008/09 global financial crisis.
The productive sector is posting meagre growth, with manufacturing data last week showing output expansion of just 0.3 percent year-on-year in November.
On Tuesday mining production numbers will offer further clues on the impact of the currency's decline on exports, and the sector's contribution to 2013 GDP.
Yields on government bonds were steady at 6.16 percent on the 2015 note and dropped two basis points to 8.175 percent on the 2026 issue.
Comments
Comments are closed.