Rand reaps rewards of weaker indicatorsComment on this story
Johannesburg - South Africa's rand climbed to its strongest levels in two weeks against the dollar, taking advantage of soft economic data out of the world's two biggest economies to gain by over half a percent.
The local unit was trading at a 2-week low of 10.5695 by 17:30 SA time, 0.52 percent off its New York close.
The rand surprised by turning stronger after domestic retail sales for June came in flat at 0.0 percent year-on-year, sharply undershooting market expectations of a 0.4 percent dip.
“The local data was overshadowed by US data, which came in much softer than expected,” said economist Jana van Deventer of ETM Analytics.
“As a result we have seen a sell-off in the dollar against most major currencies, and that has provided support to the rand.”
Retail sales in the world's largest economy ticked up by only 0.2 percent in June, suggesting that third-quarter growth in the US, and consumer spending along with it, were likely pull back.
Data from China, South Africa's second-biggest trade partner, showed retail sales in July had grown less than expected.
The amount of money flowing into the Chinese economy also slowed, to its lowest level in nearly six years.
Signs of downside pressure on Chinese growth is of concern to rand traders given the implications for domestic exports, market watchers said.
Government bonds tracked the rand stronger, with yields on both benchmarks falling.
Yields on 2015 paper shed 2.5 basis points and on 2026 paper 0.5 basis points, to 6.665 percent and 8.315 percent respectively. - Reuters