Rand weakens as investors await data
THE RAND retreated against the US dollar yesterday, pulling back from three-week highs as investors held off bets and took in profits ahead of domestic and overseas gross domestic product (GDP) data due later in the week.
Local growth numbers, due today are expected to show a 1.5 percent expansion in the third quarter, up from 0.6 percent in the previous quarter, but well below the government’s target of 4 percent annual growth.
At 5pm yesterday, the rand was bid at R10.9911 to the dollar, 6.61c weaker than at the same time on Friday.
The rand’s recent rally to below the crucial R11 mark will be tested by offshore events.
Market watchers expect the release of US GDP data today to show the number one economy remains on track for recovery, raising the likelihood of interest rate hikes.
“The rand did react favourably to the Chinese rate cut but that is out of the way now,” David Gracey at Investec Asset Management said.
“We must also be aware the SA Reserve Bank last week said they’re focusing on the US cycle,” he added, saying that the euro zone’s intensified stimulus measures would not fill the void left by the end of the US bond-buying programme.
Government bonds were also softer, with the yield on the benchmark issue maturing in 2026 rising.