* Manufacturing jump gives rand momentary reprieve
* Rand expected to weaken with bleak global growth
JOHANNESBURG, April 11 (Reuters) – South Africa’s rand
weakened against the dollar on Wednesday, holding around the 8
rand level after testing 2-1/2 month lows earlier in the session
during a softer trend for the currency caused by a bleak global
growth outlook.
Upbeat local manufacturing data out earlier momentary lifted
the currency from weaker levels as the sector, which contributes
15 percent of GDP, signalled decent growth in the first quarter,
however analysts say the robust number will not be sustained
through the year.
The rand, highly correlated to global risk sentiment because
of South Africa’s trading ties with Europe and China and the
currency’s deep liquidity, is expected to weaken past 8 rand for
the remainder of the week while uncertainty about Europe
prevails.
The local unit was 0.34 percent weaker at
8.0073/dollar at 1607 GMT, off Tuesday’s 7.9805 close. It hit
2-1/2 month lows of 8.0515 earlier.
February factory output grew by 4.1 percent in volume terms
on an annual basis from 2.3 percent in January, beating market
expectations for 2.0 percent growth.
It touched 7.9665 after the robust data, before retreating.
“Despite the positive data, we believe that the rand is
likely to remain on the back foot in the short to medium term
due to lingering concerns over Europe with a particular focus on
developments in Spain,” Shireen Darmalingam, an economist at
Standard Bank said in a note.
Continued…
