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The South African rand dipped in early Thursday trading, following the broader trend in emerging market assets as investors awaited local data, including the Purchasing Managers’ Index (PMI) and November manufacturing output.
The currency traded at 16.4875 against the U.S. dollar, down roughly 0.3% after a 0.5% drop on Wednesday, as markets factored in rising geopolitical tensions and U.S. economic data for signs of future monetary policy moves.
“Many in the market have turned their focus to valuations, which they felt were unsustainable,” ETM Analytics noted in a research update.
Attention is on South Africa’s Absa PMI survey, which is expected to provide insight into conditions in Africa’s most industrialised economy. Analysts surveyed by Reuters anticipate manufacturing output for November to have risen by 0.2%.
Earlier data from the central bank showed that South Africa’s net foreign reserves increased to $71.14 billion at the end of December, up from $70.02 billion in November.
Despite the rand’s slight losses, sentiment towards the currency remains largely positive, with TreasuryONE currency strategist Andre Cilliers noting this support should help keep it relatively firm.
Meanwhile, South Africa’s benchmark 2035 government bond softened in early trading, with yields climbing 2.5 basis points to 8.315%.
