Rand steady as investors await data

The rand steadied in early trade on Monday, as investors stayed away from taking big positions ahead of a slew of data, which will give some insights into the health of Africa’s most industrialised economy.

At 0640 GMT, the rand traded at R15.23 versus the US dollar, not far off its close of R15.22 on Friday.

The rand has in recent weeks been supported by an uptick in global risk appetite, which has hurt the dollar. It has gained 6% against the US currency since the start of November.

But focus has once again shifted to South Africa’s frail economic fundamentals, even though analysts expect the carry-trade appeal to continue supporting the rand.

“The favourable external backdrop provided shelter from a brittle domestic environment,” said analysts at NKC African Economics.

“The solid gains for higher-yielding emerging market (EM) currencies in recent weeks do not deter us from expecting a lot more. We think EM carry trades are just getting warmed up.”

Statistics South Africa will publish third-quarter gross domestic product (GDP) figures on Tuesday, while consumer price inflation (CPI) and retail sales data is due on Wednesday.

A hard coronavirus lockdown led to a steep economic contraction in the second quarter, with lower CPI enabling the South African Reserve Bank to cut rates to a record low to support the economy.

In fixed income, the yield on the benchmark 10-year government bond was down 0.5 basis point to 8.975%.