File image: IOL
File image: IOL

South Africa's rand weakens as global recession fears weigh

By Mfuneko Toyana Time of article published Oct 2, 2019

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JOHANNESBURG - South Africa’s rand weakened for a second straight session on Wednesday, after dismal U.S. manufacturing data raised fears of a global recession and underscored the damaging effects of the prolonged trade war between Washington and Beijing.

At 0630 GMT the rand was 0.26% weaker at 15.3750 per dollar from an open of 15.3300, extending losses for the month to nearly 1.7%.

Data on Tuesday showed U.S. factory activity shrank in September to its weakest in over a decade, ratcheting up fears that the U.S.-China trade war is hobbling the world’s largest economy.

The figures followed equally weak euro zone factory data earlier in the week, with the rising chances of a global recession souring risk appetite as investors fled for safety.

Locally, South Africa’s seasonally adjusted Absa Purchasing Managers’ Index (PMI) sank to its lowest level in a decade in September, on weak demand linked to fears over slowing domestic and global growth.

With no major economic releases due in the session, the rand is expected to drift weaker, with the bearish backdrop expected to push the unit close to the 15.50 mark.

Bonds were flat, with the yield on the benchmark government issue due in 2026 steady at 8.355%. 


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