The rand declined for the first time in six days, retreating from a one-month high against the dollar before the release of data this week expected to show that prices are rising as the economy slows.
South Africa’s currency retreated 0.4 percent to 8.6863 a dollar as of 4:15 p.m. in Johannesburg, after climbing as much as 0.4 percent on Nov. 7 to 8.6500, the strongest level since Nov. 8. Yields on benchmark 10.5 percent bonds due December 2026 dropped two basis points, or 0.02 percentage point, to 7.35 percent.
Consumer prices in Africa’s largest economy rose 5.6 percent in November from a year earlier, unchanged from the month before, according to the median estimate of economists in a Bloomberg survey. Mining production probably dropped 2.9 percent in October while manufacturing grew 0.3 percent, separate surveys show.
“The inflation data will in the main reflect an elevated price pressure environment while the manufacturing data will confirm a weak underlying productive base,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments. “It is not the kind of environment where the rand is likely to perform particularly well.”
ETM is advising clients to buy dollars at dips below 8.65 rand.
Bond yields fell before the year’s last fixed-rate government bond auction tomorrow, and as bondholders reinvested interest payments due this month, according to Thando Vokwana, a bond trader at Rand Merchant Bank in Johannesburg.
“Reinvestment of coupons has seen bond yields, particularly backend stock, plummet,” Vokwana wrote in a note e-mailed to clients. Yields on 2026 securities have dropped 25 basis points since the beginning of last week.
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