Rand Signatures on Poor US Employment Figures; markets to July levels

JOHANNESBURG – The rand strengthened on Friday, supported by the lure of higher yields and a falling dollar after job growth slowed in the United States.

The rand strengthened on Friday due to the attraction of higher yields and a fall in the dollar after job growth slowed in the United States.

At 1600 GMT, the rand was 0.75% firmer at 16.6050 to the dollar, from a close at 16.7300 overnight in New York.

The dollar lagged behind after job growth slowed further in August when government financial assistance dried up, threatening the economy’s recovery from the COVID-19 recession.

Locally, a light data release schedule has seen the rand driven mainly by problems abroad. The return of nationwide power outages this week has prevented the unit from making any significant progress.

But with second-quarter economic growth data to be released on Tuesday expected to show a sharp contraction, the rand, among the top-performing emerging market currencies, saw some buying from investors who wanted to pocket short-term gains.

Economists polled by Reuters in August again lowered their forecasts, now expecting an annualized contraction of 44.5% in the April-June quarter, compared with a July survey median estimate of a 38.7% drop. .

A number of factors fueled pessimism in the stock market this week, pushing it to the levels seen in early July. The prospects of a continued power outage and domestic political turmoil nullified the positive manufacturing data coming from China, Europe, Russia and the local market.

The FTSE / JSE all-share index continued its losing streak, falling 1.2% to 53,879 points on Friday and ending the week with a drop of almost 4% from the close of last week.

The FTSE / JSE index of the top 40 companies lost 1.2% to close the week at 49,720 points.

Bonds were weaker, with the 2030 benchmark government bond yield up 12 basis points at 9,230%.

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