Johannesburg - The rand fell over one percent against the dollar after weaker-than-expected mining and manufacturing data on Thursday painted a bleak growth picture for Africa's largest economy.
South Africa's currency extended the losses in late afternoon trade as the euro sank after downbeat European Central Bank comments on the euro zone economy.
September data released earlier in the session showed South African manufacturing output contracted 1.1 percent, against expectations for a 0.5 percent fall, and compared to a 2.8 percent expansion in August.
Strikes that began in the mining sector in August were largely to blame, with mining output down 8.3 percent in September, its weakest performance in five months.
The rand was down 1.2 percent at 8.7455 against the dollar in late afternoon trade, making it the day's biggest loser in a basket of emerging market currencies trading against the dollar and tracked by Reuters. It had managed a 8.6336 close in New York on Wednesday.
“The external environment is broadly risk-off, but the rand has underperformed its EMEA peers and this can only be due to the disappointing mining and manufacturing output releases,” said Christopher Shiells, emerging market analyst for Informa Global Markets.
Thursday's move shifted the rand back into its three-week range, with dealers saying they were bracing for the next bad news that would push the currency out of the range towards weaker levels.
“This data has caused traders to price in lower third quarter GDP growth which, if growth cannot be sustained by the consumer, could lead to the SARB cutting rates again, ignoring inflation risks,” Shiells added.
Charts show the rand finds initial support at 8.80 and needs to break through 8.85 to have convincingly moved out of its recent range.
Bonds ended flat after initially weakening with the rand. The yield on the 2015 note was at 5.47 percent and that on the 2026 issue at 7.64 percent.
Treasury switched R2.08-billion of a 2014 bond into the 2026 issue and said it was looking to do the same transaction with R1-billion next week. - Reuters