South Africa's rand on the back foot as recession clouds gather
JOHANNESBURG, May 4 (Reuters) - South Africa's rand weakened on Monday, dragged lower by a grim local economic outlook and outflows from local bonds after the country officially fell out of the World Government Bond Index (WGBI).
At 0645 GMT the rand ZAR=D3 was 0.15% weaker at 18.8400 per dollar, adding to the previous session's losses to trade at its softest in a week.
Low volumes following Friday's bank holiday added to the weakness, with a dearth of offshore demand available to cushion thin liquidity, widening spreads, and risk-off sentiment sparked by renewed tensions between the United States and China. recent recovery in the rand is in line of a test in its durability following a more negative turn in global market sentiment during the early stages of the new trading month," said Jameel Ahmad, head of currency strategy at FXTM.
National Treasury is forecasting a deep recession this year, with gross domestic product set to shrink by close to 6% as the economy remains in a lockdown aimed at curbing coronavirus infections. regulations for a easing of one the world's strictest lockdowns were only finalised last Wednesday, leading to some confusion when they came into effect on Friday. Only some sectors may restart operations, and with limited staff. were weaker, with yields on the main government debt jumping following the country's official exit from the WGBI as credit downgrades in late March ended the country's last investment-grade rating. 2030 bond ZAR2030= traded at 10.29%, 2 basis points higher.
In stocks, Famous Brands FBRJ.J , owner of restaurant chains including Steers and Wimpy, reported negligible revenue for five weeks as it geared up for the start of delivery-only services following the easing of the lockdown.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or