Stronger dollar keeps rand under pressure, stocks rise

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November 4, 2015 10:45 AM

At 0747 GMT the rand inched 0.28 percent weaker to 13.7750 per dollar, recovering from a one-month low on Tuesday.

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 weakened against a globally stronger dollar in early trade on Wednesday as the greenback was buoyed by expectations of strong U.S. payrolls data due on Friday.

Stocks opened slightly higher with the blue-chip Top-40 index up 0.6 percent to 48,839 points.

"A broad-based stronger USD environment drove emerging market currencies weaker," Barclays economist Peter Worthington said. "We continue to favour fading (rand) rallies in the run up to Friday’s U.S. payrolls print."

Robust employment figures from the United States will confirm the resilience of the rebound by the world's top economy and further raise the likelihood that its central bank will finally lift interest rates at its December policy meeting.

READ: Rand firm in quiet trade, stocks inch higher

Investors shrugged off China's services sector data which came in relatively stronger, easing concerns over persistent weakness in the economy.

"The main focus will be on the U.S. ISM (non-manufacturing) number, this afternoon. U.S. trade data as well as the ADP employment report — the latter acting as a guide for the official payroll report,"Rand Merchant Bank currency strategist John Cairns said.

A likely strong labour momentum will be enough for the Fed to consider an interest rate hike this year, which could hurt emerging market currencies like the rand.

Government bonds on the other end bucked the trend, strengthening across the curve with the benchmark 2026 paper down 3.5 basis points at 8.375 percent.

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