File image: IOL
JOHANNESBURG – The rand started the week firmer against the dollar, recovering some ground on Monday after steep losses last week although a number of economic data releases in the coming days could knock it back off track.

The rand’s gains were mostly driven by global factors, including the US decision to shelve plans to impose tariffs on Mexico and rising chances that the next US interest rate move will be a cut given lacklustre jobs data last week.

At 5pm on Monday the rand traded at 14.7950 versus the dollar, around 1.17 percent stronger than its previous close. Global factors also boosted emerging market equities, to their highest point in nearly four weeks yesterday.

However, local factors could again soon pull the rand back again.

After last week’s news that the South African economy contracted by over 3 percent in the first quarter, investors are now turning their attention to data releases on manufacturing, retail sales and business confidence to further gauge the economy’s health, Lukman Otunuga, research analyst at FXTM, said in a note.

“Should the pending reports fail to meet market expectations, the rand which is already tussling with domestic headwinds, may find itself exposed to downside risks,” the note said.

The rand slumped last week following news of the economic contraction and also amid a row over the central bank’s mandate, which rattled investors.

Government bonds were flat, with the yield on the benchmark 2026 instrument at 8.415 percent.

Reuters