• Friday, May 24, 2024
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South Africa’s rand touches new 8-mth low vs dollar, seen struggling


South Africa’s rand touched a fresh 8-month low against the dollar on Monday as the greenback extended last week’s broad-based gains after stronger than expected U.S. GDP data.

The rand fell to 11.2755 to the dollar, its weakest since February 3 according to Thomson Reuters data, and was at 11.2525 by 0700 GMT. This compared with Friday’s New York close at 11.2290.

The dollar touched a fresh four-year high against a basket of currencies and a six-year peak against the yen on Monday, getting a tailwind from data showing higher U.S. growth in the second quarter.

The data has reinforced expectations the Federal Reserve could start tightening policy earlier than expected.

South African government bonds weakened alongside the rand, pulling the yield on the 2026 benchmark 3 basis points higher to 8.275 percent.

A slew of local and global economic data this week is expected to pile pressure on the rand, including an expected widening in South Africa’s trade deficit in August.

“The trend remains upwards on dollar/rand and sideways on the crosses as the great dollar rally of 2014 drives everything before it,” Rand Merchant Bank analyst John Cairns said in a note.