Rand recovers from three-week lowComment on this story
Johannesburg - South Africa's rand recovered from a three-week low against the dollar on Wednesday to pull back within a recent trading range, pinning its hopes on international market events for further support.
The rand strengthened 0.21 percent to 10.7200 against the dollar by 08:25 SA time after touching its weakest since August 21 in the previous session, hit by a dollar rally and increased market aversion to riskier assets.
“The rand is coming under pressure because of strong US data,” said John Cairns of Rand Merchant Bank.
The dollar performed stronger against nearly all major and emerging market currencies, pushed higher by manufacturing data releases on Tuesday showing the continued growth of the world's largest economy.
The conflict between Russia and Ukraine continues to weigh on investor sentiment toward riskier assets, channelling capital flows into safe-haven currencies rather than volatile emerging market economies such as South Africa.
“Rand ranges, however, remain very much intact and it is only the end-week events of the ECB and non-farm payrolls that offer meaningful risks of a range-break,” Cairns added.
The euro zone's central bank meets on Thursday, with market watchers anticipating the ECB will announce stimulus plans to boost flagging economic growth, a move that could benefit the local market if the plan includes a broad bond-buying project.
Government bonds were stronger, with the yield on the 2015 issue down 4 basis points to 6.59 percent and the yield on the longer-dated 2026 paper down 2 basis points to 8.09 percent. - Reuters