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Rand firms on poor US jobs figures; markets down to July levels

The rand firmed on Friday as the lure of higher yields and a slide in the dollar after jobs growth slowed in the United States.

Picture: 123rf

JOHANNESBURG - The rand firmed on Friday, supported by the lure of higher yields and a slide in the dollar after jobs growth slowed in the United States.

The rand firmed on Friday as the lure of higher yields and a slide in the dollar after jobs growth slowed in the United States.

At 1600 GMT the rand was 0.75% firmer at 16.6050 per dollar, from a close of 16.7300 overnight in New York.

The greenback was on the back foot after employment growth slowed further in August as financial assistance from the government ran out, threatening the economy's recovery from the COVID-19 recession.

Locally, a light data release calendar has seen the rand driven mainly by offshore issues. The return of nationwide electricity blackouts this week has kept the unit from making major headway.

But with second-quarter economic growth data due on Tuesday and expected to show a steep contraction, the rand, among the highest-yielding emerging market currencies, saw some buying from investors wanting to pocket short-term gains.

Economists polled by Reuters in August lowered their forecasts again, and now expect an annualised 44.5% contraction in the April-June quarter, compared with the median estimate in a July poll for a 38.7% fall.

A slew of factors fuelled pessimism in the stock market this week, pushing it down to levels seen in the beginning of July. Prospects of a continued power cut and internal political turmoil overruled positive manufacturing data coming from China, Europe, Russia and the local market.

The FTSE/JSE all-share index continued its losing streak, falling 1.2% to 53,879 points on Friday and ending the week down almost 4% from the last week's close.

The FTSE/JSE top-40 companies index lost 1.2% to close the week at 49,720 points.

Bonds were weaker, with the yield on the benchmark 2030 government bond up 12 basis points at 9.230%.

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