South Africa’s rand was slightly weaker against the dollar on Tuesday (23/10/2012) as the market remained tentative ahead of a slew of local data this week, including the medium-term budget statement.
The rand was at 8.6765 to the dollar at 0643 GMT, 0.5 percent below Monday’s New York close.
Two months of labour unrest in Africa’s biggest economy and credit downgrades by Moody’s and Standard and Poor’s have weighed on the rand, which slumped to a 3-1/2 year low of 8.995 on Oct. 8.
The currency has since rebounded and analysts say inflows into government bonds and a healthy stock market have supported the recovery.
The benchmark JSE Top-40 index topped the 33,000 mark for the first time in its 17-year history last week.
Analysts said the market is likely to remain subdued ahead of the release on Wednesday of September inflation figures and the medium-term budget statement on Thursday.
"Our asset classes are not being actively traded,” said Brigid Taylor, head of institutional sales at Nedbank, adding that the market was "waiting for better clarity with regards to where the economy is actually going.”
Government bonds were barely changed, with the 3-year and 14-year instruments trading at 5.4 percent and 7.6 percent respectively.
Analysts at Absa Capital said they expected the rand to trade in the 8.50-9.00 range for the rest of the year due to domestic challenges.
"Even though there are signs that the worst of the local strike activity may be behind us, South Africa’s fundamental backdrop remains relatively precarious given the widening current account deficit, the sizeable fiscal deficit situation and the deteriorating output gap,” the bank said in a note. - Reuters