The rand recovers after long slump against the dollar

July 9, 2015 4:40 AM

The index measuring the greenback against a basket of major currencies slipped over 0.2 percent as minutes of the Fed's June policy meeting.

South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013. REUTERS/Siphiwe Sibeko

South Africa's rand recovered against the dollar on Thursday after minutes from the U.S. Federal Reserve signalled a rate hike there would likely be left until at least September.

By 0600 GMT the rand had firmed 0.49 percent to 12.5100 after plunging to a fresh one-month low of 12.5820 overnight, as fears of a strike in the gold sector and the ongoing sell-off in China's equity market weighed.

The index measuring the greenback against a basket of major currencies slipped over 0.2 percent as minutes of the Fed's June policy meeting indicated the bank needed further signs of an economic recovery before raising interest rates.

The Fed's cautious tone offered some reprieve to emerging market currencies dragged lower by Greece's debt crisis and commodity prices hit by China's slowing economy.

"The rand remains weak against its peers driven partly by the lower commodity price arena, partly by poor fundamentals and partly by a bit of momentum," said Warrick Butler, chief currency trader at Standard Bank.

Dollar buying remained the key market driver, Butler noted, although the rand could test the 12.48 resistance.

Government bonds remained in a thin range, with the benchmark issue due in 2026 trimming 1 basis point to 8.25 percent.

South Africa's statistics department publishes May mining data at 0930 GMT followed by manufacturing output figures at 1100 GMT.

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