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South Africa's Rand Recovers From Selloff
A shop owner shows off South Africa's banknotes, which features an image of former president Nelson Mandela on the front, November 6, 2012. PHOTO By REUTERS/Siphiwe Sibeko.
23/08/2013
JOHANNESBURG (Reuters) - South Africa's rand held steady against the dollar on Friday, a day after hitting a new four-year low, but remains vulnerable to domestic labour unrest and the prospect of reduced U.S. monetary stimulus in the coming weeks.
The rand was at 10.2645 to the dollar at 0647 GMT, 0.2 percent stronger from Thursday's New York close.
It slumped to a low of 10.4450 early on Thursday, partly on expectations the U.S. Federal Reserve will soon begin reducing its monetary easing programme that has boosted emerging market assets.
The rand has also been weighed down by a strike in the auto sector, responsible for about 6 percent of the country's GDP, and threats of labour action next week in the crucial gold mining and construction sectors.
The rand recovered later in the session after upbeat Chinese PMI data but may struggle to hold on to its gains.
"Although yesterday's pullback appears warranted, we still doubt that the rand will manage to sustain this recovery over the coming weeks and months because of the portfolio implications associated with the Fed's quantitative easing tapering activities," Absa Capital analysts wrote in a note.
Government bond yields inched lower, declining 3 basis points on the 2026 paper to 8.635 percent and 4 basis points on the 2015 instrument to 6.46 percent.
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