South African bank notes featuring images of former South African President Nelson Mandela (R) are displayed next to the American dollar notes in this photo illustration in Johannesburg, file. southafricnews/Siphiwe Sibeko
JOHANNESBURG (southafricnews) – South Africa’s rand weakened early on Friday, dragged lower by a bounce in the dollar and data that showed business confidence in the country fell, underlining the struggles faced by the local economy.
At 0630 GMT the rand was 0.12% weaker at 14.9200 per dollar, extending a 1% slide in the previous session as selling was spurred by China deciding to halve tariffs on some U.S. goods.
The rand had a torrid January, losing around 8% to the greenback as fears of the impact on global growth from the coronavirus outbreak triggered heavy selloff of emerging market assets.
The resumption of nationwide power cuts by state firm Eskom last week rattled the last remaining rand bulls, with a slide in business confidence index on Thursday further encouragement for investors to sell the currency.
The South African Chamber of Commerce and Industry’s monthly business confidence index slipped to 92.2 in January from 93.1 in December.
“Technically, yesterday’s move on the USD-ZAR raises the real possibility of a move back toward the 15.000/$ handle, with a bull flag evolving,” analysts at ETM wrote in a note.
So, expect more gains for the pair in the near term, especially if today’s non-farm payrolls data comes out strong.”
Bonds were also weaker, with the yield on the benchmark 2026 paper up 1.5 basis points to 7.925%.
Reporting by Mfuneko Toyana; Editing by Shounak Dasgupta