Concerns over weak global, domestic economy weigh on rand

folarin okunola

May 11, 2016 5:25 PM

The stock market opened slightly higher, with the benchmark Top-40 index

A street money changer counts South African Rands in Harare, Zimbabwe, May 5, 2016. REUTERS/Philimon Bulawayo

The South African rand traded a touch softer against the dollar on Wednesday, with lingering concerns about slowing global economic growth likely to keep it under pressure.

The stock market opened slightly higher, with the benchmark Top-40 index <.JTOPI. rising 0.4 percent.

At 0702 GMT, the rand was down 0.4 percent weaker at 15.1900 to the dollar compared to where it closed in New York on Tuesday.

The rand had pulled its way back from six week lows in the previous session as a firmer oil price lifted commodity currencies. But traders and analysts said worries over below-par domestic growth would add to the pressure of a weak global outlook.

Data this week showing a sharp rise in unemployment in the first quarter illustrated how South Africa's economy, expected by the Treasury to expand by just 0.9 percent this year, is not growing enough to create new jobs.

"The rand along with the other commodity currency pairs remains vulnerable, although this vulnerability over the preceding trading sessions was exacerbated by a lack of any meaningful liquidity," Nedbank Capital said in a note.

On the debt market, government bonds weakened slightly across the curve, and the yield for paper due in 2026 ticked up 2.5 basis points to 9.205 percent.

folarin okunola