adminJOHANNESBURG – The rand edged up against a globally weaker dollar on Friday, but market watchers said it would likely come under pressure next week from what is expected to be a wider second quarter current account shortfall. Most analysts expect the current account balance to have deteriorated in the quarter after recent strikes ravaged the platinum, metal and engineering sectors.
Investors have been generally bearish on the local currency since the wage boycotts, worried about the impact on already sluggish economic growth.
The South African Reserve Bank will release the current account data in its quarterly bulletin on Tuesday, with analysts polled by Reuters expecting it to widen from 4,5% of GDP in the first quarter.
“Though a larger Q2 shortfall has already largely been discounted by the market, the large financing requirement associated with such a deficit is likely to keep the rand on the back foot next week,” said Jeffrey Schultz, an analyst at BNP Paribas Cadiz Securities.
On Friday, the rand found a reprieve from data that showed US employers added the fewest jobs in eight months, weakening the dollar against a basket of currencies.
By 15:06 GMT the unit traded at R10.6975/$, up 0,3% from Thursday’s close.
In fixed income, government bonds reversed the previous day’s gains, with yields nudging slightly higher.
The yield on the 2026 paper added 3 basis points to 7,995% while the 2015 issue at the short end of the curve was up a basis points at 6,55%. – Reuters
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Bongani Ndlovu