Johannesburg - South Africa's rand weakened slightly against the US dollar on Monday, tracking a weaker euro after dovish comments from the European Central Bank President Mario Draghi knocked the regional currency.
Draghi told a central banking conference in Jackson Hole on Friday that the ECB was prepared to respond with all its “available” tools should inflation in the euro zone drop further, raising prospects of more policy easing.
The rand, tracking the currency of its biggest trading bloc, traded at 10.7075 by 08:40 SA time on Monday, weaker than its close of 10.6950 in New York on Friday.
“Dollar/rand faces upside risks following the euro/dollar collapse after Jackson Hole,” John Cairns, currency strategist at Rand Merchant Bank said in a market note.
“From the 10.72 seen in early indicative trade out of Asia, look for a push past the last high of 10.75 and possibly even into the 10.80s.”
The local unit weakened to a session low of 10.7210 so far, however expected low trading volumes because of a bank holiday in Britain could see the rand trade sideways.
Local investors will be bracing for second quarter economic growth data on Tuesday, where economists have forecast numbers to show a lacklustre but expanding economy, after a 0.6 percent contraction in the first quarter.
On Monday, government bonds tracked moves on the rand, weakening slightly.
Yields rose 1.5 basis points on the benchmark bonds to 6.55 percent on the 2015 note and 8.215 percent on the 2026 issue. - Reuters