Rand treads narrow pathComment on this story
Johannesburg - The rand traded largely flat against the dollar in a lacklustre Monday session due to a holiday in the United States, with weak domestic economic fundamentals likely to keep the currency under pressure.
A political crisis in neighbouring Lesotho, while not directly impacting the rand, could also send out an investor-negative signal about stability in the region, traders said.
The local unit drifted in a narrow 10.6460/6845 range during the session, and was at 10.6775 per dollar by 18:00 SA time, 0.1 percent off Friday's close in New York.
In fixed income, yields on the 2026 benchmark and the paper due next year added 1 basis point to 7.995 percent and 2 basis points to 6.62 percent respectively.
Vehicle trading data for August confirmed that Africa's most advanced economy remains in dire straits despite narrowly avoiding a recession in the second quarter, with new car sales shrinking 1.4 percent year-on-year.
“The economy is not in recession but is plodding along very slowly and that's not encouraging from an investor perspective,” Bidvest Bank chief dealer Ion de Vleeschauwer said.
The rand could weaken if the European Central Bank and the Bank of England signal policy easing and if jobs data from the US confirms a recovery is on track in the world's biggest economy.
“It looks like US fundamentals are quite strong and interest rates will inevitably go up there sooner rather than later and its going to be tough for the rand,” de Vleeschauwer said. - Reuters