Rand close to five-year low

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NewRandMoney Reuters.

Johannesburg - South Africa's rand was trading close to a five-year low on Monday as the dollar remained strong, supported by an upbeat outlook on the US economy from outgoing Federal Reserve Chairman Ben Bernanke.

The rand was at 10.6780 to the dollar at 08:18 SA time, down 0.1 percent from Friday's New York close.

It slumped to 10.7 percent on Thursday, its weakest since December 2008 amid thin holiday trading and a flight from risky assets.

On Monday, the dollar hovered near a four-week high after Bernanke's comments on Friday fanned expectations of faster stimulus reduction by the Fed.

Non-farm payrolls data at the end of this week will give further clues on the strength of the US recovery and the pace of the reduction in the Fed's bond-buying stimulus, which has supported emerging market currencies like the rand in the past few years.

The dollar's strength and imminent tapering, combined with a threat of strikes in the platinum sector by members of the Association of Mineworkers and Construction Union (AMCU) could keep the rand on a weak footing.

“Trading volumes could remain relatively light until next week, but given ... potential industrial action on the local front and dollar firmness in general, we expect the local unit to remain under pressure in the near term,” Absa Capital analysts wrote in a note.

The yield on the 2026 government bond was 2.5 basis points higher at 8.29 percent while that on the 2015 paper was up 1.5 basis points at 6.225 percent. - Reuters



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