JOHANNESBURG (Reuters) -The South African rand weakened on Tuesday, losing steam after a strong performance in July and as global risk-off sentiment increased.
At 1547 GMT, the rand traded at 18.2500 against the dollar, about 2% weaker than its previous close. It also slipped more than 1% on Monday.
The dollar last traded at 102.33, around 0.4% firmer against a basket of global currencies.
“There was no particular news event that caused the rand to weaken… I think this is just a normal correction,” Wayne McCurrie, portfolio manager at First National Bank, told Reuters.
Its weakness on Monday coincided with concerns about China’s economy that “dampened risk appetite,” Andre Cilliers, currency strategist at TreasuryONE, said.
Locally, the Absa Purchasing Managers’ Index (PMI) survey showed that manufacturing activity contracted for a sixth consecutive month in July.
Hit by the country’s worst power crisis to date, infrastructure bottlenecks and high unemployment, South Africa will overshoot its budget deficit target this year, economists told Reuters.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index ended the day around 0.5% lower than its closing level on Monday.
Shares in AngloGold Ashanti fell more than 7% after the miner forecast lower half-year profit, mainly due to higher costs and mandatory environmental provisions in Brazil.
South Africa’s benchmark 2030 government bond was also weaker, with the yield up 11.5 basis points to 10.330%.
“(South Africa) does not look like an attractive investment destination at the moment and will need to maintain higher bond yields to keep itself funded with foreign capital,” Danny Greeff, co-head of Africa at ETM Analytics told Reuters.
(Reporting by Tannur Anders and Anait Miridzhanian; Editing by Bhargav Acharya, Bernadette Baum, David Evans and Barbara Lewis)
