Rand recovery stalls

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NewRandMoney Reuters.

Johannesburg - South Africa's currency weakened against the dollar on Monday as weak domestic fundamentals stalled rand bulls around the 10.55 level while the dollar gained broadly in the session.

The rand has been in recovery mode from a 10-week-low hit last week, but factors such as domestic output data and credit ratings announcements later this week are keeping investors on edge.

Dealers said failure to end a 20-week strike in the platinum mines was also a worry, partly as it might set the tone for tough talks in South Africa's broader 'strike season' annual rounds of mid-year wage negotiations.

The rand traded at 10.6250/dollar at 17:49 SA time, down 0.4 percent from its close in New York on Friday.

The rand hit a session high of 10.5560 earlier in the day as it looked to continue a correcting trend from oversold levels from last Wednesday.

However the currency lost momentum and weakened back to levels above 10.60.

“What's underlying for us is the importance of the mid-10.50's. It's very important that we break the lows of today,” said Jim Bryson, a currency trader from Rand Merchant Bank in Johannesburg, adding that if the rand bulls fail to pick up momentum, the unit could retreat back to a 10.60-10.80 range.

Investors are worried about possible credit rating downgrades from Fitch and Standard and Poor's on Friday, which would bring further pressure on the rand.

The rand has been hit over the past few weeks by data showing Africa's most advanced economy was contracting, with further strikes looming.

A credit downgrade could see the rand spiralling into further losses.

Investors will be looking to manufacturing and mining data out on Tuesday, to assess the extent of the slow-down.

Government bonds were flat, with the yield on the benchmark 2026 issue at 8.215 percent. - Reuters



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