JOHANNESBURG Aug 13 (Reuters) – South Africa’s rand traded
a touch softer against the dollar on Monday and remains
vulnerable to dim global economic prospects while retail sales
numbers out later in the week will provide the latest clue on
the domestic interest rate outlook.
By 0649 GMT the rand was 0.42 percent weaker at
8.1045 to the dollar compared with Friday’s New York close at
8.0710.
“The market still seems wary of any negative news out of
Europe,” Standard Bank trader Warrick Butler said.
“Given the lack of economic data out today and in the
absence of any major news we will continue to play the
8.0600-8.1100 narrow range.”
The rand has lost nearly 9 percent from this year’s highs
around 7.40/dollar in February, battered by risk aversion as
investors worry that debt problems affecting the euro zone could
spread.
Government bonds were largely steady in early Monday trade,
with the yields on the three-year and 14-year
benchmarks each dipping just half a basis point to
5.63 percent and 7.405 percent respectively.
Lingering uncertainties over the euro zone crisis and the
weak global growth outlook should keep rand bulls at bay, with
8.05 proving a hard level to breach, Absa Capital said in a
note.
“This morning’s Japanese GDP data indicate the global
economic recovery remains extremely fragile, which could
restrict further risk appetite, unless the market believes
(this) will actually prompt the authorities to inject further
stimulus,” it said.
While the local market should largely follow global trends
this week, South African retail sales data out on Wednesday
could rekindle expectations of a domestic rate cut if it the
data comes in worse than expected, weighing on the rand and
pushing bond yields lower.
(Reporting by Stella Mapenzauswa; Editing by David Dolan)
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