South Africa’s rand off lows but still vulnerable
South Africa’s rand edged up on Tuesday from two-month lows against the dollar hit the previous day but remained under pressure as traders shifted their focus from domestic politics to global economic data.
The currency hit a two-month low of 15.7420 on Monday after a newspaper report, denied by the government, that Finance Minister Pravin Gordhan faces arrest.
The report raised concerns of a repeat of the run on the rand and bonds in December after President Jacob Zuma changed finance ministers twice in a week, just as South Africa tries to fend off a credit ratings downgrade.
“Domestic sentiment will remain negative for the rand,” Rand Merchant Bank analyst Isaah Mhlanga said in a note.
“From a data perspective, today will be dominated by market-moving U.S. data which should take attention away from local politics.”
The currency market will have a chance to gauge the underlying strength of the U.S. economy through a batch of data later in the day, including consumer inflation numbers, industrial production and manufacturing output.
South African stocks were set to open higher at 0700 GMT, with the JSE securities exchange’s Top-40 futures index up 0.59 percent.
In fixed income, the yield for the benchmark bond due in 2026 was up 0.5 basis points to 9.335 percent.
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