JOHANNESBURG — The rand was slightly weaker against the dollar yesterday and will probably remain under pressure from continuing nervousness about emerging markets.
The rand was at R11,1900 to the dollar, down marginally from Friday’s New York close.
The currency has made a tentative recovery from a new five-year low of R10,3900 hit last week as investors dumped emerging market assets. The South African Reserve Bank’s decision to increase its repo rate by 50 basis points to 5,5% last Wednesday failed to halt the rand’s slide because the market viewed the move as insufficient.
Finance minister Pravin Gordhan said the rand’s volatility was excessive, and South Africa and other emerging markets would have to cope with an “overshooting” in their currencies, the Business Day newspaper quoted him as telling its TV arm on Monday.
The release of US nonfarm payrolls data and the European Central Bank’s policy meeting later this week could potentially move the rand but the direction of other emerging market currencies would most probably have a bigger impact.
“The main impetus for the rand will come from other emerging market currencies,” said John Cairns of Rand Merchant bank.
“Action will be sentiment and flow driven. We continue to watch the Turkish lira, Brazilian real, Russian rouble and the Indian rupee — they, of course, are watching each other and the rand.”
The yield on the 2026 government bond edged up 1,5 basis points to 8,945% while that on the 2015 paper was up 0.5 basis points at 7,4%.