Rand weakens ahead of growth dataComment on this story
Cape Town - The rand weakened for the first time in three days before the release of data that may show growth in Africa’s biggest economy slowing as Finance Minister Pravin Gordhan’s prepares to deliver his annual budget speech.
The rand depreciated 0.2 percent to 8.8847 per dollar as of 9:03 a.m. in Johannesburg.
Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.24 percent after dropping eight basis points, or 0.08 percentage point, last week.
South Africa’s gross domestic product probably expanded 2.4 percent last year, from 3.1 percent in 2011, data tomorrow will show, according to the median estimate of 19 economists surveyed by Bloomberg.
Growth is slowing as a rebound in South Africa’s biggest trading partner, the euro area, fails to gain traction and manufacturing in China, the biggest buyer of the nation’s raw materials, expands at the slowest pace in four months.
“The GDP number could generate some rand weakness if we are correct in our expectation of a weak number,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.
“While there is a large two-way risk, the potential for sharp rand weakness seems greater than for sharp rand gains.”
Retail sales growth slowed to 1.6 percent in December, from 3.4 percent a month earlier, according to a February 20 report.
Mining output contracted 3.2 percent, a separate report showed, while unemployment, at 25 percent, remains the highest of 39 emerging markets tracked by Bloomberg.
Strikes that curbed output at mines and farms have cut the government’s revenue as Gordhan tries to narrow the budget deficit as a percentage of GDP by 30 basis points to 4.5 percent in the 12 months through March 2014.
Gordhan will present the budget to lawmakers on February 27. - Bloomberg News