South Africa’s rand gave back some of the previous day’s gains against the dollar on Tuesday, but should stick within narrow ranges in a trading week cut short by public holidays.
Producer inflation, credit and trade data out tomorrow and Friday will probably reinforce the view that the Reserve Bank could increase interest rates by the end of this year to stave off inflationary pressures.
At 6.35am the rand traded 0,2% softer at 6,74 to the dollar after closing Monday’s session in New York at 6,7267.
The rand had rallied to 6,6925 on Monday, its strongest level since April 12, according to Reuters data.
“With Asian markets opening weaker this morning on the back of disappointing earnings data, the rand has gotten off to a shaky start this week,” Standard Bank said in a note.
The rand also took its cue from the euro, which slipped after European Central Bank comments taken by some market players as showing frustration over the dollar’s relentless fall and also an attempt to talk up the currency.
“The host of local data out this week . . . should provide some direction for the (rand) — particularly if the data strengthens interest rate hike expectations. However, with more public holidays this week locally and in the UK, the rand will likely remain stuck in a range,” Standard Bank said.
Johannesburg markets were shut for Easter on Friday and Monday, and will be closed again on Wednesday for the Freedom Day holiday.
Government bonds weakened slightly, nudging the yields on the 2015 and 2026 notes up half a basis point to 7,645% and 8,66% respectively.