SOUTH Africa’s rand weakened on Tuesday as the dollar steadied and global investors awaited further clues on the direction of global lending rates.
At 1515 GMT, the rand traded at 14.2750 versus the dollar, 0.35% below its previous close, after giving up small overnight gains.
The dollar index rose around 0.2% on the day.
The demand for yield by investors facing low to zero rates in developed markets has kept the rand strong, although volatility remains high as South Africa’s structural economic growth issues remain a concern.
“The unsustainability of the ZAR’s recent strength is also evident in the options market, where it ranks worse in terms of implied vols (volumes) relative to other EM currencies over longer durations than it does over shorter durations,” said economists at ETM analytics.
Bonds were flat, with the benchmark 2030 government issue at 9.085%.
Shares on the Johannesburg Stock Exchange (JSE) extended losses on Tuesday amid what analysts said the lack of no new triggers for a market already at a high.
“We are just following the global markets at the moment,” said Wayne McCurrie, portfolio manager at FNB.
“There is almost no good news that the market can get that’s going to push it up higher,” he said. The expectation of a strong U.S. earnings season which drove the market last week is already priced in, he added.
Tuesday’s fall in JSE was primarily led by the country’s banks, mainly its third-biggest Absa Group Ltd (ABGJ.J) which shed over 4% after its Chief Executive Daniel Mminele stepped down following a rift with the bank’s board.