Rand higher ahead of manufacturing data

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Graphic: Renjith Krishnan.

Johannesburg - South Africa's rand was slightly firmer against the dollar on Thursday but continued to look vulnerable ahead of the release of manufacturing production figures later in the day.

The rand was at 8.8930 to the dollar at 08:32 SA time, slightly firmer than Wednesday's New York close.

Statistics South Africa will release manufacturing production data for December at 13:00 SA time, figures that are expected to provide an indication of the health of Africa's biggest economy.

“Another poor performance by the manufacturing sector would only confirm and further highlight the level of structural imbalances in the economy and why the rand as a currency is likely to remain vulnerable,” Tradition Analytics said in a note.

Although figures released on Tuesday showed that unemployment fell to 24.9 percent in the fourth quarter of 2012, from 25.5 percent in the third quarter, economists have pointed out that the news was not as positive as it appeared.

Some 68,000 jobs were lost overall, Tradition said, but because the decline in the “economically active” population was greater, the unemployment rate eased.

“This data is nothing to be proud or excited about,” the analysts wrote.

Reports on Wednesday that South African farmers had started laying off thousands of labourers two days after the government raised the minimum wage for the sector by 50 percent also highlighted the worsening economic backdrop.

The layoffs are in addition to 14,000 planned job cuts announced by Anglo American Platinum last month.

Government bond yields fell, dropping 3 basis points on the 2026 issue and 2 basis points on the 2015 paper. - Reuters


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