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Rand retreats ahead of US jobs data

At 0640 GMT the rand was 0.6% weaker at R12.6625 per dollar compared to a close of R12.5875 overnight in New York.

South African rand.  Picture: Christa Eybers/EWN

JOHANNESBURG - South Africa’s rand weakened early on Friday as the dollar continued to put pressure on emerging currencies globally ahead of closely watched US employment data.

At 0640 GMT the rand was 0.6% weaker at R12.6625 per dollar compared to a close of R12.5875 overnight in New York.

The rand was amongst the worst performing emerging market currencies in April and remains on the back foot in May with the greenback lifted by rising bond yields and a promising economic outlook as its central bank eyes higher lending rates.

Friday’s employment report for April will be evaluated for further indications of the strength of the US labour market and inflation pressures.

With the rand recording losses of around 5 percent in the last month, and little in the political arena to jumpstart sentiment, some traders opted to lock tks in positions around the R12.50 mark, triggering some selling of short-dated contracts.

“Fundamentally, we need to ask ourselves whether the renewed strength of the greenback is just a clearing out of stale short positions or whether it is a fundamental shift in the trajectory of the US dollar,” said analyst at Rand Merchant Bank Michelle Wohlberg.

Bonds were also weaker, with the yield on the benchmark paper due in 2026 up 2 basis points to 8.35%.

Stocks were set to open firmer when trade commences at 0700 GMT, with the Top-40 futures index up 0.53%