The rand rebounded from a two-month low against the dollar as investors weighed the outlook for stimulus before tomorrow’s meeting of the European Central Bank and reports that may show the U.S. expansion lost momentum.
South Africa’s currency appreciated 0.2 percent to 10.2260 per dollar as of 4:01 p.m. in Johannesburg. The rand fell 1.1 percent yesterday to the weakest level since Sept. 4. Yields on benchmark 10.5 percent bonds due December 2026 dropped three basis points, or 0.03 percentage point, to 8.13 percent.
The ECB is projected to keep its main interest rate on hold, while U.S. reports on growth and payroll figures may give clues on the outlook for the Federal Reserve’s bond-buying program. South African manufacturing production probably slowed in September, a report may show tomorrow, reducing the Reserve Bank’s room to stimulate the economy by cutting interest rates.
“The markets are growing increasingly cautious at the current highs and the significant data locally and from the ECB as well as the U.S. this week,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd., said in an e-mailed note. Nedbank sees the rand trading between 10.15 and 10.30 per dollar today, he said.
Manufacturing output in Africa’ biggest economy was unchanged in September, after increasing 0.2 percent in August the previous month, according to the median estimate of 14 economists in a Bloomberg survey. Mining production probably rose 6.8 percent from 2.1 percent, a separate report may show tomorrow.
Business confidence fell to 91.1 in October from 91.4 a month earlier, the South African Chamber of Commerce and Industry said in an e-mailed statement today. The index averaged 91.4 in first 10 months of 2013, compared with 94.4 in same period last year, SACCI said. Foreign investors sold a net 905 million rand ($89 million) of South African bonds and 627 million rand of equities yesterday, according to JSE Ltd. data.