JOHANNESBURG - THE RAND clawed back some losses yesterday after weakening to a two-week low as optimism around vaccine deliveries offset traders’ concerns while data showed the manufacturing sector in South Africa experienced slowing growth in production in April.
After starting the trade at R14.50 to the dollar, the rand rose 0.11 percent to R14.39 against the greenback at 5pm.
On Sunday, South Africa received its first batch of Pfizer vaccines consisting of 325 000 doses.
More shipments are expected in the coming weeks to make a total of 1.3 million by the end of the month and 4.5 million by June.
TreasuryONE’s currency specialist Andre Cilliers said the rand had pared gains on Friday due to the US dollar rallying back following better-than-expected growth numbers.
Cilliers said the demand for dollars had caused the rand to blip up a little.
“The next target for the rand is to break above the R14.50 level, and should this go in the early morning trade, we can expect the rand to test a little higher,” Cilliers said. “Should we fail to break this level, the expectation is for the rand to drift sideways or start heading back to the R14.40 level.”
Meanwhile, the Absa Purchasing Managers’ Index (PMI), released yesterday, slowed down slightly to 56.2 index points in April from a fivemonth high of 57.4 points in March.
However, the index was about 2.5 points above the average recorded in the first quarter of the year, and 26 points above the reading recorded during the strictest phase of lockdown.
Absa said that for the first time since early 2012, all five subcomponents of the PMI were in positive terrain.
“Even the subcomponent most often trailing below the 50-point mark, the employment index, managed to increase to well above 50 in April,” it said. “It is too early to tell whether this points to a sustained improvement in job creation in the manufacturing sector, but it is a positive development nonetheless.”
Absa said although the risk of a third wave of Covid-19 infections remained present, relatively low increases in new local infections during the month may have also underpinned the recovery in sentiment.
“This does mean that should virus metrics turn less favourable, sentiment could sour once again,” it said.
Investec economist Kamilla Kaplan said confidence was likely boosted by positive prospects for sales and activity based on the global economic recovery. Kaplan, however, said it was likely that production was knocked by the electricity load-shedding during the month as well as by supply constraints.
BUSINESS REPORT