Rand recovers 1% despite dismal local data

Disappointing local manufacturing data failed to dent the rand’s recovery on Tuesday, with global risk assets rebounding after a strong performance by Chinese equity markets earlier.

A lack of major economic data releases, and a stabilising Chinese yuan, suggested a reprieve for risk assets and emerging-market currencies, said Oanda vice-president of market analysis Dean Popplewell.

A rising oil price also failed to spoil the mood, and the rand also brushed off yet another domestic economic data release that underscored the sedate pace of SA’s economic recovery.

Local manufacturing production increased by 0.7% year-on-year in June 2018, after a 1.5% increase in May. This was well below Trading Economics’s consensus of 1.7%.

Global trade was risk-on, with the Shanghai Composite earlier jumping 2.7%, something that followed a strong performance on Wall Street on Monday. Upbeat corporate earnings reports in the US continue to stimulate investor interest.

The price of Brent crude, however, pushed back towards $75 a barrel on Tuesday, after the US announced the re-imposition of various sanctions against Iran. There is still uncertainty regarding how tough the US will be in pushing sanctions to rein in Iran’s nuclear programme, and its support for militant groups in the Middle East, reports Dow Jones Newswires. Also uncertain is the level of support Washington will receive from other signatories of the 2015 nuclear deal with Tehran.

At 3pm, the rand was at R13.2932 to the dollar, from R13.4421, at R15.4253 to the euro from R15.5306, and at R17.2336 to the pound from R17.3973.

The yield on the benchmark R186 was at 8.69% from 8.73%, while the R207 was at 7.48% from 7.53%.