Johannesburg - The rand weakened to near a month-low against the dollar early on Tuesday as investors worried about the health of South Africa's economy, while the dollar enjoyed broad-based strength.
Investors are waiting the South African Reserve Bank's release of reams of second quarter data in its quarterly bulletin report.
The main focus will be the current account number, which analysts expect to have widened to a deficit of 5.45 percent of GDP, from 4.5 percent in the first three months of the year.
The data is also likely to show depressed consumer spending trends and high household debt.
A wider current account gap highlights South Africa's external vulnerability and puts pressure on the currency because the account is traditionally funded by portfolio inflows.
The dollar is rallying against major currencies as investors reassess their interest rate expectations after a branch of the US Federal Reserve published a paper saying market expectations of lower rates for longer were running below those of policymakers.
At 08:40 SA time, the rand was at 10.8200, slightly weaker than its close in New York.
It has tested a session low of 10.8300 so far, its weakest since August 8.
“The market has failed in the 10.80 - 10.88 area six times in the past four months so resistance will be steep but, for the first time in weeks, there is a real risk of a break of the range to the topside,” John Cairns, currency strategist for Rand Merchant Bank, said in a market note.
Rand Merchant Bank will release its RMB/BER Business Confidence Index at 12:00 SA time, which is likely to show underlying weakness in the productive sectors of the economy.
The manufacturing and mining industries have contracted in the first six months of this year.
The yields on the benchmark 2026 government bond rose 6.5 basis points to 8.16 percent.
Treasury results of a weekly sale of 2.35 billion rand of fixed income bonds are due after the auction closes at 11:00 SA time. - Reuters