Rand slips to week lowComment on this story
Johannesburg - South Africa's rand fell to its lowest level in a week against the dollar on Tuesday, as another indicator showing domestic economic weakness and a public holiday in the United States combined to push the currency lower.
The local unit slipped 0.26 percent to 10.7065 per dollar by 07:55 SA time, its weakest point since August 26, after closing at 10.6785 in New York.
The rand edged weaker after trading flat on Monday in a sluggish session with US markets closed for Labour Day.
A raft of economic data to be released on Tuesday could further weaken the rand if the figures point to a continued recovery in the world's largest economy, which would give the dollar a lift.
Locally, new vehicle sales slumped by 1.4 percent year-on-year in August, data released on Monday showed, the latest indicator underscoring the precarious economic position Africa's most advanced economy finds itself in.
“Rand fragility remains high,” ETM Analytics said in a market note.
“Persistently weakening growth has led to a market outlook on central bank interest rates which is increasingly shallow, reducing the medium-term value prospect of the rand as an attractive carry destination.”
Low levels of employment, stubbornly high inflation and flagging production have pushed South Africa's central bank to raise interest rates in 2014, with another hike of between 25 and 50 basis points expected later this month.
Government bonds also weakened, with yields on both benchmark issues edging higher.
The yield on the 2015 paper climbed 3 basis points to 6.63 percent, while that on the paper due in 2026 ticked up 4.5 basis points to 8.03 percent. - Reuters