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Rand slightly firmer in cautious trade

The rand has struggled for momentum in recent sessions, despite global demand for risk currencies spurred by dimming hopes of a quick recovery in the United States economy and some jitters heading into US elections in November.

Picture: Christa Eybers/EWN

JOHANNESBURG - The rand firmed in early trade on Thursday, joining fellow emerging market currencies in an advance against a weaker dollar that shielded the local unit from domestic economic woes.

At 0730 GMT, the rand was 0.21% firmer at R16.7800 per dollar compared to an overnight close of R16.8100.

The rand has struggled for momentum in recent sessions, despite global demand for risk currencies spurred by dimming hopes of a quick recovery in the United States economy and some jitters heading into US elections in November.

While the dollar paused its slide to a 28-month low earlier this week, high-yielding units like the rand have lured buyers hungry for returns, concerns about local politics and signs of a still weak local economy have kept rand bets cautious.

South African private sector activity contracted for the 16th straight month in August, albeit at a slower rate, as COVID-19 lockdown restrictions continued to hurt demand and sentiment, a PMI survey showed on Thursday.

A third day of nationwide power cuts by state utility Eskom has also restrained demand for the rand.

“Price action in the foreign exchange markets has of late remained exceptionally volatile. The rand has over the course of the week thus far traded in a range between R16.5500 and R16.9700,” analysts from Nedbank said in a note.

“Trading conditions are likely to remain challenging as we approach the release of NFP (non-farm payrolls) data from the US tomorrow.”

Bonds inched weaker, with the yield on the benchmark 2030 government issue up 0.5 basis points to 9.14%.

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