Rand recovers slightly, remains under pressure

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May 10, 2016 4:58 PM

By 0645 GMT, the rand had inched 0.2 percent firmer to 15.1690 per dollar, the unit's softest level since April 8.

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

South Africa's rand steadied on Tuesday but remained near one- month lows as gloomy economic prospects continued to weigh on sentiment after the unemployment rate rose to a record high.

Government bonds were weaker, with the benchmark paper due in 2026 adding 1 basis point to 9.155 percent.

The rand rallied briefly to below 15.00 in overnight trade as global commodity prices recovered and modest consumer inflation data in China cheered emerging assets.

Traders however said the rand was vulnerable to another bout of weakness after falling by more than 2 percent in the previous session as the dollar gained and concerns over domestic economic growth weighed.

"Commodity markets are stable again this morning, and this has fed into the rand and other commodity currencies. However, sentiment is extremely fragile," said currency strategist at Rand Merchant Bank John Cairns in a note.

Hopes that South Africa could avoid downgrades to its sovereign debt evaporated after the national jobless rate raced to 26.7 percent in the first quarter, its highest level on record.

Moody's kept its rating unchanged over the weekend. Fitch and Standard & Poor's, who both have South Africa's debt just one step above subinvestment grade, are due to make their ratings decisions in June.

On the stock market, the Top-40 futures index index was up 0.46 percent, indicating the bourse would open higher when trade resumes at 0700 GMT.

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