JOHANNESBURG — The rand traded little changed from overnight closing levels against the dollar yesterday although it retreated slightly after central bank data showed a slowdown in private sector credit extension. Reuters
Trade data due out later in the day could add pressure on the currency if it shows a wider-than-expected trade deficit for March. The rand was at R8,9950/$ by 08:33am, down just 0,06% from Monday’s close at R8,99.
The currency gave up about two cents after central bank data released at 8am showed year-on-year growth in credit demand slowed to 7,79% in March from 7,88% in February.
The data backs the case for interest rates to remain at four decade lows as the Reserve Bank tries to help stimulate still-frail growth after a 2009 recession.
Government bonds were mixed, with the yield on the 2026 issue, the market benchmark, dropping a basis point to 6,755% while the shorter-dated 2015 paper was flat at 5,195%.
Economists polled by Reuters expect the revenue service to announce at 2pm an R8,5bn trade deficit for March compared with a R9,5bn shortfall in February.
The number, however, tends to be volatile and thus difficult to forecast.
“Given the market’s concerns about yawning external deficits, any outcome that is worse than the consensus will likely lead to some rand weakening, and perhaps strengthening if it comes out better than consensus,” Absa Capital said in a note.
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“The exchange rate is at the whim of a chance outcome of a highly volatile and unpredictable number.”
