Rand pauses after four-session slide

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NewRandMoney Reuters.

Johannesburg - South Africa's rand was largely unchanged against the US dollar on Tuesday, recovering after four sessions of losses but still unable to shake off negative economic sentiment following a banking downgrade this week.

By 08:49 SA time, the local unit had firmed slightly to 10.7300 per dollar after earlier touching its softest level against the greenback since August 8 this year.

The currency came under pressure in the previous session from a rampant US dollar, which reached 11-month highs after the Federal Reserve's signalled an earlier-than-expected interest rate hike.

Rate hikes and tighter fiscal policy in the world's largest economy look set to diminish large capital in-flows into emerging market economies like South Africa.

Currency trader Warrick Butler of Standard Bank urged clients to cash-in on rand weakness and dollar strength.

“If you have been long on the US dollar, the smart play would be to take some off it should we get an early morning panic-spike into the high 10.70s.”

The effects of low growth, high unemployment and crippling labour unrest were highlighted by unsecured lender African Bank's collapse this month and rating's agency Moody's downgrade of South Africa's main commercial banks on Tuesday.

Government bonds followed the rand weaker.

The yield on the paper due next year ticked-up 2.5 basis points to 6.6 percent, while yields on the longer-dated 2026 paper rose 3 basis points to 8.275 percent. - Reuters

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