The South African rand weakened on Friday as a firmer U.S. dollar and caution ahead of key domestic economic data dampened appetite for risk-sensitive currencies.
At 0710 GMT, the rand traded at 15.90 to the dollar, around 1 percent weaker than its previous close.
The dollar gained 0.4 percent against a basket of currencies, supported by political developments in Washington after U.S. lawmakers reached a deal to avert a looming government shutdown. Sentiment was also affected by a sharp drop in gold prices, which slid more than 4 percent amid market speculation that the U.S. Federal Reserve could adopt a more hawkish stance than expected. Gold is one of South Africa’s major exports.
Like many emerging market currencies, the rand often takes its cue from global factors such as U.S. monetary policy expectations, in addition to domestic developments.
On the local front, investors were awaiting a series of data releases due later in the day from the South African Reserve Bank, the revenue service agency and National Treasury.
Earlier on Friday, data from the central bank showed that M3 money supply growth eased to 8.16 percent in December, from 8.26 percent in November. Private sector credit growth, however, accelerated to 8.74 percent, up from 7.79 percent the previous month and well above the 7.60 percent forecast in a Reuters poll.
Later in the session, South Africa’s revenue service agency is expected to publish trade balance figures, while National Treasury is due to release budget balance data. The figures are likely to provide fresh clues on the state of the economy and the government’s fiscal position.
In the bond market, South Africa’s benchmark 2035 government bond weakened in early trade, with the yield rising 14.5 basis points to 8.11 percent, reflecting the broader risk-off tone.
