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THE rand weakened against the dollar early yesterday, pulling back from a 5-week high hit overnight as political tensions in emerging markets such as Ukraine and Turkey remained and depressed risk appetite.
The rand managed gains to 10.75/dollar in the previous session, boosted by expectations of upbeat GDP data, a market-positive budget and as dealers unwound long-dollar positions.
At 06:45 GMT, South Africa’s currency was down 0.3 percent to 10.8270, off a 10.7940 close in New York on Monday.
“An overnight eruption of renewed political problems in Turkey is set to spoil what is otherwise an excellent rand environment,” said John Cairns of Rand Merchant Bank in a note.
The lira and the rand were the two worst performing currencies against the dollar in a basket of emerging market units tracked by Reuters.
“After a New York low near 10.75, dollar/rand is already back at 10.82 this morning and is potentially set for a very volatile day.”
Tension in Ukraine as it tries to emerge from a violent political crises is also keeping investors nervous.
Statistics South Africa will release the last quarter of 2013’s economic growth data, which will give a full picture of how Africa’s largest economy fared last year.
Expectations are for a jump in quarter-on-quarter growth to 3,4 percent from 0,7 percent in the third quarter. Government bonds were up with yields on the benchmark 2026 bonds down 2,5 basis points to 8,6 percent, while the shorter-dated 2015 note gave up 6,5 basis points to 7,18 percent. – Fin24
Online Reporter