South Africa’s rand weaker as EM sentiment remains sour

JOHANNESBURG – South Africa’s rand stumbled into the New Year more than half a percent weaker against the U.S. dollar on Friday, driven lower by increasingly negative sentiment towards riskier emerging market assets.

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On Thursday China, the world’s number two economy and a major trading partner for South Africa, said its official Purchasing Managers’ Index (PMI) slipped to 50.1 in December, the lowest level of 2014.

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Signs that the giant Asian economy’s growth is cooling could see a decline in demand for metals and minerals, of which South Africa is major exporter, a trend already seen in November trade figures revealing domestic exports to Asia had tumbled by more than 16 billion rand.

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By 0650 GMT, the local unit had softened 0.52 percent to 11.6200 per dollar, while the greenback soared to its highest levels in almost nine years against major global currencies.

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Dollar strength, and persistently weak performance by European and developing economies, means the rand will remain vulnerable.

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In fixed income, yields on the benchmark issue due in 2026 added 3 basis points to 7.99 percent. -Reuters