South Africa's rand gains against broadly weaker dollar

May 13, 2015 6:23 AM

JOHANNESBURG (Reuters) - South Africa's rand firmed slightly against the dollar on Wednesday, driven mainly by broad-based dollar weakness abroad and also buoyed by stronger than expected domestic manufacturing output data.

Former South African Reserve Bank Governor Gill Marcus shows off South Africa's new banknotes, which features an image of former president Nelson Mandela on the front and images of the country's "Big Five" wild animals on the reverse, before conducting the first transaction in Pretoria, November 6, 2012. REUTERS/Siphiwe Sibeko

At 0841 GMT, the local currency was changing hands at 12.0350 to the greenback, a 0.25 percent gain over Tuesday's close at 12.0650.

The dollar was on the defensive against a basket of major currencies in a market wary of U.S. retail sales coming in below expectations.

High yielding emerging market currencies like the rand have tended to strengthen whenever U.S. data undermines the case for interest rates to rise in the world's biggest economy.

A Tuesday report showing South Africa's manufacturing production expanded by a more than expected 3.8 percent in March, keeping the door open for domestic rates to rise this year.

For Wednesday, the market would turn to euro-area GDP data and U.S. retail sales for direction, Barclays Africa said in a note.

"The rand could benefit from continued broad-based dollar depreciation if these data print below consensus and thereby spur renewed risk-on trading," it said.

South African government bonds firmed alongside the rand, with the yield on paper maturing in 2026, dipping 3 basis points to 8.13 percent.

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